Japan: Inflation comes in at highest level since September 2014 in August
September 20, 2022
Inflation came in at 3.0% in August, which was up from July’s 2.6%. August's result represented the highest inflation rate since September 2014. Price pressures accelerated for food; fuel, light and water charges; transport; and culture and recreation.
Meanwhile, core inflation rose to 2.8% in August, from the previous month's 2.4%.
The trend pointed up slightly, with annual average inflation coming in at 1.4% in August (July: 1.2%).
Finally, consumer prices rose 0.36% in August over the previous month, below July's 0.48% rise.
A base effect drove the acceleration in headline inflation in August, as month-on-month inflation slowed. In month-on-month terms, price pressures for fuel and transport weakened thanks to declining crude prices. That said, prices for culture and recreation grew at a faster pace in month-on-month terms, suggesting some degree of demand-pull inflation.
That said, our panelists expect headline inflation to soften in what remains of the year. Real wages have grown 0.6% on average this year, unlikely to lead to a sustained increase of inflation to above 3%. Key factors to watch include commodity prices and the value of the yen.