Japan Inflation


Core prices see highest increase in over four years

In June, the core consumer price index, which excludes volatile fresh food prices, remained unchanged over the previous month and was below the 0.2% increase recorded in May. The reading mostly reflects how higher prices for fuel, electricity and water charges, as well as for medical care, were offset by lower prices in most of the other categories.

Annual core consumer prices jumped from a flat reading in May to a 0.4% increase in June - the highest level recorded since November 2008. Moreover, the print overshot the 0.3% rise foreseen by market analysts. Overall consumer prices rose 0.2% over June last year, contrasting the 0.3% drop seen in May and marking the strongest increase tallied in over a year.

The Tokyo core consumer price index - available one month in advance of the national figures and thus a leading indicator for countrywide inflation - rose 0.3% in July over the same month last year (June: 0.2%). This result, which was in line with market expectations, represents the strongest reading since March 2009.

The Bank of Japan expects core consumer prices to rise between 0.5% and 0.8% 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% (previously expected: between 0.7% and 1.6%). 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 1.8%.

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Japan Inflation Chart

Japan Inflation June 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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