Japan Inflation January 2016


Japan: Core inflation falls back to zero in January

February 26, 2016

In January, the core consumer price index, which excludes volatile fresh food prices, fell 0.7% compared to the previous month, which was below the 0.2% drop in December. The print, which hit an 86-month low, mainly reflected a sharp drop in prices for clothes and footwear as well as for transportation and communication.

Core prices in January were flat over the same month last year, which was below the 0.1% increase tallied in December. The print was in line with the result predicted by market analysts. Overall inflation in January fell from 0.2% in December to zero in January.

Core prices for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—fell 0.1% in February over the same month of the previous year (January: -0.1% year-on-year), which was less than the 0.2% drop that market analysts’ had expected.

The Bank of Japan (BoJ) expects that core inflation will be between 0.2% and 1.2% in the fiscal year ending March 2017. In the following fiscal year, the BoJ sees inflation between 2.0% and 3.1% and somewhere between 1.0% and 2.1%, excluding the effects of the expected consumption tax hike in April 2017. FocusEconomics Consensus Forecast panelists expect inflation of 0.7% in the calendar year 2016, which is down 0.1 percentage points from last month’s estimate. In 2017, the panel sees inflation at 1.9%.


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Japan Inflation Chart

Japan Inflation January 2016 0

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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