Japan Inflation February 2016


Japan: Core inflation remains at zero in February

March 25, 2016

In February, the core consumer price index was flat compared to the previous month, which was above the 0.7% drop in January. The print mainly reflected that sharp drops in prices for fuel, light and water charges, transportation and communications as well as for furniture and household utensils were offset by an increase in costs for culture and recreation, food and clothes and footwear.

Core prices in February were flat over the same month last year, which matched the result tallied in January. The print undershot the 0.1% increase predicted by market analysts. Overall inflation in February rose from zero in January to 0.3% in February.

Core prices for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—fell 0.3% in March over the same month of the previous year (February: -0.1% year-on-year), which exceeded the 0.2% drop that market analysts’ had expected.

The Bank of Japan (BoJ) expects that core inflation will be between 0.2% and 1.2% in the fiscal year ending March 2017. In the following fiscal year, the BoJ sees inflation between 2.0% and 3.1% and somewhere between 1.0% and 2.1%, excluding the effects of the expected consumption tax hike in April 2017. FocusEconomics Consensus Forecast panelists expect inflation of 0.5% in the calendar year 2016, which is unchanged from last month’s estimate. In 2017, the panel sees inflation at 1.8%.

Author: Ricard Torné, Lead Economist

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Japan Inflation Chart

Japan Inflation February 2016

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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