Japan Inflation

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Japan: Core inflation stable in March, Tokyo core surges to 22-year-high amid tax increase in April

April 25, 2014

In March, the core consumer price index, which excludes volatile fresh food prices, rose 0.3% over the previous month. The reading, which followed the 0.1% increase tallied in February, was mainly driven by a large jump in prices for clothes and footwear.

Annual core inflation held steady at 1.3% for the fourth consecutive month in March and thus core inflation remains at the highest rate since October 2008. February's reading was just below market expectations of a 1.4% rise. Overall inflation inched up from 1.5% in February to 1.6% in March.

Core inflation for Tokyo-available one month in advance of the national figures and thus a leading indicator for countrywide inflation-surged from 1.0% in March to 2.7% in April, marking the highest level since 1992. While the result slightly undershot the 2.8% that market analysts had expected, it reflects that businesses passed the burden of the new tax rate introduced in April on to consumers.

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 2.4% in the calendar year 2014, which is unchanged from last month's estimate. In 2015, the panel sees inflation at 1.6%.


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Japan Inflation Chart


Japan Inflation March 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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