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Japan: Core inflation stalls in July

August 28, 2015

In July, the core consumer price index, which excludes volatile fresh food prices, was unchanged compared to the previous month, which was in line with the result tallied in June. The print mainly reflected that a sizeable drop in prices for clothes and footwear as well as for fuel, light and water charges was offset by higher costs for culture and recreation and transportation and communication.

Core inflation was flat in July, which was down from the 0.1% tallied in June. The print overshot the 0.2% drop in core prices that market analysts had expected and represented the lowest print since May 2013. Overall inflation fell from 0.4% in June to 0.2% in July.

Core prices for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—fell 0.1% in August (July: -0.1% year-on-year), which was slightly above 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 2016. In the following fiscal year, the BoJ sees inflation rising to somewhere between 1.2% and 2.2%. FocusEconomics Consensus Forecast panelists expect inflation of 0.7% in the calendar year 2015, which is down 0.1 percentage points from last month’s estimate. In 2016, the panel sees inflation at 1.0%.


Author: Ricard Torné, Lead Economist

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Japan Inflation July 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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