Japan Inflation


Core prices rebound in February

In February, the core consumer price index, which excludes volatile fresh food prices, rose 0.1% over the previous month. The reading contrasted the 0.3% fall recorded in January and ends a streak of three consecutive declines in the index. Core prices were mostly affected by higher prices for furniture and household utensils as well as for transportation and communications.

As a result, core consumer prices declined 0.3% compared to the same month last year. The print exceeded the 0.2% drop seen in January, but was a notch above the 0.4% decline foreseen by market analysts. Meanwhile, in February, overall consumer prices fell 0.6% over the same month last year, which undershot the 0.3% fall seen in January.

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 0.5% in March over the same month last year. The print was above market expectations that had prices falling at February's 0.6% pace.

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 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 February 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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