Japan Inflation May 2018


Japan: Core inflation stable in May

June 22, 2018

The core consumer price index rose 0.1% in month-on-month seasonally-adjusted terms in May, reversing April’s 0.1% fall.

Core inflation was steady at 0.7% in May, unchanged from April and in line with market expectations. Overall inflation ticked up for the first time in in five months, edging up to 0.7% in May from 0.6% in April. Nevertheless, inflation remains well below the Bank of Japan’s inflation target of 2.0%.

Core inflation for Tokyo moderated from 0.6% in April to an eight-month low of 0.5% in May. Data on core inflation for Tokyo for June will be released on 29 June.

May’s stagnant inflation print is disheartening news for the Bank of Japan, which is grappling with persistently low inflation despite ultra-loose monetary policy. The BoJ downgraded its inflation forecast at its 27–28 April monetary policy meeting, as there is little indication inflation will rise closer to the target in the near-term.

Japan Inflation Forecast

The median inflation forecast among BoJ members is 1.3% for FY 2018 and 2.3% for FY 2019. Last month, FocusEconomics Consensus Forecast panelists expected inflation of 1.0% in calendar year 2018, which was down 0.1 percentage points from the previous month’s estimate. In 2019, our panelists saw inflation at 1.2%.


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