Japan Inflation March 2022


Japan: Core inflation comes in at highest level since January 2020 in March

April 22, 2022

Core consumer prices—which exclude fresh food—increased 0.40% over the previous month in March, matching February's reading.

Core inflation came in at 0.8% in March, which was up from February’s 0.6% and was in line with market expectations. March's reading marked the highest inflation rate since January 2020. Annual average inflation rose to 0.8% in March (February: 0.6%). Lastly, consumer price inflation rose to 1.2% in March, from February’s 0.9%.

Analysts at ING commented on the reading:

“Goods prices including energy rose sharply (0.7% s.a. mom) but service prices only edged up by 0.1%. There are no clear signs that rising energy and raw material prices are being passed on to consumer prices. Based on weak demand-side price pressures, the Bank of Japan is expected to justify that its fight against deflation should continue.”

Meanwhile, analysts at Nomura noted the government’s efforts to shield consumers from higher gasoline prices:

“A substantial negative contribution to [year-on-year] inflation came from gasoline [..] We expect the year-on-year increase in gasoline prices to slow as a result of efforts by the Japanese government to keep prices down (in the form of subsidies to mitigate fluctuations in petroleum fuel prices).”

That said, they argued:

“We forecast that core inflation will peak at 2.4% in Q3 2022 (our forecast as of 5 April), but we also see a risk that inflation could be higher than this because of a reduction in the supply of cereals due to the conflict in Ukraine and the depreciation of the yen, which has been proceeding particularly rapidly of late.”

FocusEconomics panelists expect overall consumer prices to increase 0.9% in 2022, which is up 0.1 percentage points from last month’s estimate. In 2023, the panel sees prices rising 0.7%.


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Japan Inflation Chart

Japan Inflation March 2022 0

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

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