Japan Inflation


Core prices fall for third consecutive month in January

In January, the core consumer price index, which excludes volatile fresh food prices, fell 0.3% over the previous month. The reading was down from the 0.1% decline recorded in December. Core prices were mostly affected by lower prices for clothing and footwear as well as for culture and recreation.

As a result, core consumer prices declined 0.2% compared to the same month last year. The print matched the result seen in December and was in line with market expectations. Meanwhile, in January, overall consumer prices fell 0.3% from the same month last year, which undershot the 0.1% fall seen in December.

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 0.6% in February over the same month last year (January: -0.5% year-on-year), which exceeded the 0.5% drop anticipated by the market.

The Bank of Japan expects consumer prices to rise between 0.3% and 0.6% in the fiscal year ending in March 2014. In the following fiscal year, the BoJ sees inflation at between 2.5% and 3.0%. FocusEconomics Consensus Forecast panellists expect consumer prices to remain flat in 2013, which is up 0.2 percentage points from last month's estimate. In 2014, the panel sees inflation at 1.5%.

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Japan Inflation Chart

Japan Inflation January 2013

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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