Japan Inflation

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Japan: Core inflation inches down in June from May's multi-year high

July 25, 2014

In June, the core consumer price index, which excludes volatile fresh food prices, was flat over the previous month. June’s result came in below the 0.4% increase recorded in May. June’s print mainly reflected that higher prices for culture and recreation and for fuel, light and water charges were offset by lower prices in most of the remaining categories.

Annual core inflation inched down from 3.4% in May to 3.3% in June. May’s print had represented the highest reading since 1982. That said, the slight moderation tallied in June was in line with market expectations. Overall inflation ticked down from 3.7% in May to 3.6% in June.

According to analysts, inflation eased slightly in June because April’s sales tax hike is taking a toll on economic growth and the weak yen’s impact on prices is fading.

Core inflation for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—was stable at the previous month’s 2.8% in July and just barely overshot the 2.7% that market analysts had expected.

The Bank of Japan (BoJ) expects that core inflation will be between 3.2% and 3.5% in the fiscal year ending March 2015. In the following fiscal year, the BoJ sees inflation falling to somewhere between 1.9% and 2.8%. FocusEconomics Consensus Forecast panelists expect inflation of 2.5% in the calendar year 2014, which is unchanged from last month’s estimate. In 2015, the panel sees inflation at 1.6%.


Author: Ricard Torné, Head of Economic Research

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Japan Inflation June 2014

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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