Japan: Core inflation falls to seven-month low in December

The core consumer price index fell 0.1% in month-on-month seasonally-adjusted terms in December, contrasting November’s flat reading.

Core inflation fell from November’s 0.9% to 0.7% in December, the lowest reading in seven months. The decline mostly reflected December’s drop in oil prices and undershot the 0.8% that market analysts had expected. Therefore, inflation remained well below the Bank of Japan’s inflation target of 2.0%. Overall inflation declined from November’s 0.8% to an over two-year low of 0.3% in December.

Core inflation in the Ku-area of Tokyo inched down from November’s 1.0% to 0.9% in December. Data for January will be released on 25 January.

Japan Inflation Forecast

The median inflation forecast among BoJ members is 1.9% for FY 2019 and 2.0% for FY 2020, including the effects of the consumption tax hike. FocusEconomics Consensus Forecast panelists expect inflation of 1.2% in calendar year 2019, which is unchanged from last month’s estimate. In 2020, the panel sees inflation at 1.6%.