Japan Inflation


Highest increase in core prices since November 2008

In July, the core consumer price index, which excludes volatile fresh food prices, rose 0.2% over the previous month and was above the flat reading recorded in June. Higher prices for fuel, electricity and water charges, as well as for transportation and communications, were partially offset by lower prices for furniture and housing appliances, as well as for housing.

Annual core consumer prices inched up from 0.4% in June to 0.7% in July. The July figure represents the highest levels recorded since November 2008. Moreover, the July print was slightly above the 0.6% rise market analysts had expected. Overall consumer prices also rose 0.7% over July of last year, above the 0.2% rise seen in June.

The Tokyo core consumer price index - available one month in advance of the national figures and thus a leading indicator for countrywide inflation - rose 0.4% in August over the same month last year (July: 0.3%). This result, which was in line with market expectations, represents the strongest reading since March 2009.

The Bank of Japan (BoJ) expects core consumer prices to increase between 0.5% and 0.8% in this fiscal year ending March 2014 (previously expected: between 0.4% and 0.8%). In the following fiscal year, the BoJ sees inflation - excluding the effects of the consumption tax hikes - accelerating to between 0.7% and 1.6% (no change from previous expectation). FocusEconomics Consensus Forecast panellists expect consumer prices to remain flat in the calendar year 2013, which is unchanged from last month's estimate. In 2014, the panel sees inflation at 1.9%.

Author:, Economist

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Japan Inflation Chart

Japan Inflation July 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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