Japan Inflation


Core inflation remains at over-five-year high in January

In January, the core consumer price index, which excludes volatile fresh food prices, fell 0.2% over the previous month. The monthly drop, which was below the flat reading tallied in December, mainly reflected lower prices for clothing and footwear, as well as for culture and recreation.

Annual core inflation remained at the previous month's 1.3% in January. As a result, headline inflation remains at the highest rate since October 2008. January's reading was in line with market expectations. Overall inflation declined from 1.6% in December to 1.4% in January.

Tokyo core inflation - available one month in advance of the national figures and thus a leading indicator for countrywide inflation - rose from 0.7% in January to 0.9% in February, marking the highest level since November 2008. This result overshot the 0.8% that market analysts had expected.

The Bank of Japan (BoJ) expects that core inflation will be between 2.9% and 3.6% in the fiscal year ending March 2015. In the following fiscal year, the BoJ sees inflation falling to between 1.7% and 2.9%. FocusEconomics Consensus Forecast panelists expect inflation of 2.4% in the calendar year 2014, which is unchanged from last month's estimate. In 2015, the panel sees inflation at 1.6%.

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Japan Inflation Chart

Japan Inflation January 2014

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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