Japan Inflation


Core consumer prices continue to decline in July

In July, the core consumer price index, which excludes volatile fresh food prices, fell 0.2% over the previous month, which was above June's 0.4% drop. According to the statistics bureau, consumer prices mostly reflected how a rise in fuel, light and water charges was more than offset by lower prices in all remaining categories, particularly in clothes and footwear. As a result, core consumer prices declined 0.3% in July over the same month last year, which was an inch below the 0.2% drop seen in June. The July print, which came in line with market expectations, represented, in fact, the lowest reading seen since June 2011. Meanwhile, overall consumer prices fell 0.4% in July over the same month last year, following the 0.1% drop recorded in June. The core consumer price index for Tokyo, which is available one month before the national figures and thus is a leading indicator for countrywide inflation, fell 0.5% in August over the same month last year (July: -0.6% year-on-year). The print overshot market expectations that had the index falling 0.6%. According to the median of the Central Bank Policy Board members forecast, core inflation will average 0.2% in the 2012 fiscal year ending in March 2013. In FY 2013/14, the Bank of Japan sees core inflation at 0.7%.


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Japan Inflation Chart

Japan Inflation July 2012

Note: Year-on-year and month-on-month var. of consumer price index in %.
Source: Statistics Bureau (SB) and FocusEconomics calculations.

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