Japan Inflation

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Japan: Core inflation slows to 10-month low in January

February 27, 2015

In January, the core consumer price index, which excludes volatile fresh food prices, fell 0.6% over the previous month. The print undershot the 0.2% drop tallied in December and marked the largest decline since January 2009. The decrease mainly reflected sharp declines in prices for clothes and footwear as well as for transportation and communication.

Annual core inflation slowed from the previous month’s 2.5% to 2.2% in January. The print slightly undershot the 2.3% that market analysts had expected and represented the lowest rate since March 2014. Overall inflation stabilized at December’s 2.4% in January.

Core inflation for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—was stable in February at the previous month’s 2.2%, which matched the result that market analysts had expected.

The moderation observed in inflation since the second half of 2014 has raised concerns about the government’s ability to kick-start the economy and added more pressure to the Bank of Japan to expand further the Bank’s quantitative and qualitative monetary easing program.

The Bank of Japan (BoJ) expects that core inflation will be between 0.4% and 1.3% in the fiscal year ending March 2016. In the following fiscal year, the BoJ sees inflation rising to somewhere between 1.5% and 2.3%. FocusEconomics Consensus Forecast panelists expect inflation of 1.3% in the calendar year 2015, which is down 0.2 percentage points from last month’s estimate. In 2016, the panel also sees inflation at 1.3%.


Author: Ricard Torné, Lead Economist

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Japan Inflation Chart


Japan Inflation January 2015

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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