Japan Inflation

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Japan: Core inflation hits highest level in over five years

January 31, 2014

In December, the core consumer price index, which excludes volatile fresh food prices, was flat over the previous month and matched the result tallied in November. The monthly reading mainly reflects that lower prices for clothing and footwear were offset by higher prices for food - excluding fresh products.

Core inflation inched up from 1.2% in November to 1.3% in December, marking the highest rate since October 2008. In the full year 2013, core consumer prices increased 0.4%, which contrasted the 0.2% drop tallied in 2012 and marked the first positive annual reading since 2008.

December's result exceeded the 1.2% figure that market analysts had expected. Overall inflation remained stable at November's 1.6% in December.

The Tokyo core consumer price index - available one month in advance of the national figures and thus a leading indicator for countrywide inflation - rose 0.7% in January over the same month of the previous year (December 2013: +0.7% year-on-year). This result was in line with market expectations.

The Bank of Japan (BoJ) expects that core inflation will be between 2.9% and 3.6% in the fiscal year ending March 2015. In the following fiscal year, the BoJ sees inflation falling to between 1.7% and 2.9%. FocusEconomics Consensus Forecast panelists expect inflation of 2.3% in the calendar year 2014, which is up 0.1 percentage points from last month's estimate. In 2015, the panel sees inflation at 1.6%.


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Japan Inflation Chart


Japan Inflation December 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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