Japan Inflation


Core prices decline for fourth year in a row

In December, the core consumer price index, which excludes volatile fresh food prices, fell 0.1% over the previous month. The reading was up from the 0.3% decline recorded in November. Core prices were mostly affected by lower prices for furniture and households as well as for clothing and footwear.

As a result, core consumer prices declined 0.2% compared to the same month the year before. The print was slightly down from the 0.1% drop seen in November but came in line with market expectations. In the full year 2012, core consumer prices decreased 0.1% (2011: -0.3% year-on-year), marking the fourth straight annual fall and adding pressure on the Central Bank for more aggressive monetary policy action.

Meanwhile, in December, overall consumer prices fell 0.1% from the same month the previous year, which was a notch above the 0.2% fall seen in November.

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 January over the same month the previous year (December: -0.6% year-on-year), matching market expectations.

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Japan Inflation Chart

Japan Inflation December 2012

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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