Japan Industry


Core inflation hits highest level in nearly five years

In October, the core consumer price index, which excludes volatile fresh food prices, rose 0.2% over the previous month and was above the 0.1% increase recorded in September. The monthly increase mainly reflects higher prices for furniture and household utensils, as well as for culture and recreation.

Core inflation rose from 0.7% in September to 0.9% in October, marking the highest rate since November 2008. October's reading was in line with market expectations. Overall inflation inched up from 1.0% in September to 1.1% in October, registering the highest level in five years.

The Tokyo core consumer price index - available one month in advance of the national figures and thus a leading indicator for countrywide inflation - rose 0.6% in November over the same month last year (October: +0.4% year-on-year). This result overshot market expectations of a 0.4% increase.

The Bank of Japan (BoJ) expects that core inflation will be between 0.5% and 0.8% in the fiscal year ending March 2014. 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%. FocusEconomics Consensus Forecast panelists expect inflation of 0.1% in the calendar year 2013, which is unchanged from last month's estimate. In 2014, the panel sees inflation at 2.1%, which is up 0.1 percentage points over the previous month's forecast.

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Japan Industry Chart

Japan Industry October 2013

Note: Month-on-month changes of seasonally adjusted industrial production and year-on-year growth rate in %.
Source: Ministry of Economy, Trade and Industry (METI) and FocusEconomics calculations.

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