Japan Inflation February 2017


Japan: Core inflation inches up to nearly two-year high in February

March 31, 2017

In February, the Japan's core consumer price index was flat from the previous month, coming in above January’s 0.2% drop. The print mainly reflected that lower prices for food and transportation and communication were offset by higher prices for most of the other categories, particularly clothing and footwear.

Core inflation rose from 0.1% in January to 0.2% in February. The print represented the highest reading since April 2015 and matched market analysts’ expectations. Overall inflation came in at 0.3% in February, below January’s 0.4%.

Core prices for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—fell 0.4% in March from the same month last year (February: -0.3% year-on-year).

Although inflationary pressures are gradually resurfacing on the back of a weak yen and higher energy prices, in its March monetary policy notes, the Bank of Japan acknowledged that, “inflation expectations have remained in a weakening phase.” Therefore, the current monetary policy stance is expected to remain in place for the foreseeable future.

The Bank of Japan (BoJ) expects that core inflation will be between 0.8% and 1.6% in the fiscal year ending March 2018. In the following fiscal year, the BoJ sees inflation between 0.9% and 1.9%. FocusEconomics Consensus Forecast panelists expect inflation of 0.7% in calendar year 2017, which is unchanged from last month’s estimate. In 2018, the panel sees inflation at 0.9%.

Author: Ricard Torné, Lead Economist

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Japan Inflation Chart

Japan Inflation February 2017 1

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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