Japan Inflation


Core prices hit 13-month high in April

In April, the core consumer price index, which excludes volatile fresh food prices, rose 0.3% over the previous month. The reading followed the 0.2% increase recorded in March (previously reported: +0.3% year-on-year) and marks, in fact, the fastest monthly rise since March 2012. Core prices were mostly affected by higher prices for clothes and footwear, culture and recreation as well as for fuel, light and water charges.

As a result of the monthly reading, core consumer prices declined 0.4% compared to the same month last year, which was up from the 0.5% drop seen in March. Moreover, the print matched the result foreseen by market analysts. Meanwhile, in April, overall consumer prices fell 0.7% over the same month last year, which came in above the 0.9% decline seen in March.

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, rose 0.1% in May over the same month last year, which contrasted the 0.3% decline seen in April. The reading beat market expectations that had prices falling 0.2% and represents the first positive reading since March 2009.

The Bank of Japan expects consumer prices to rise between 0.4% and 0.8% this fiscal year ending March 2014. In the following fiscal year, the BoJ sees inflation accelerating to between 2.7% and 3.6%. FocusEconomics Consensus Forecast panellists expect consumer prices to remain flat in 2013, which is down 0.1 percentage points from last month's estimate. In 2014, the panel sees inflation at 1.8%.

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Japan Inflation Chart

Japan Inflation April 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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