Japan Inflation

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Japan: Core inflation surges to 23-year high in April on tax increase

May 30, 2014

In April, the core consumer price index, which excludes volatile fresh food prices, soared 2.2% over the previous month, which was well above the 0.3% increase recorded in March. The print, which marked the strongest monthly gain since 1980, was mainly driven by a large jump in prices for fuel, light and water charges, as well as for furniture and household utensils.

Annual core inflation surged from 1.3% in March to 3.2% in April, which represented the highest reading since 1991. April’s reading was just above market expectations of 3.1%. Overall inflation rose from 1.6% in March to 3.4% in April, which also marked a multi-year high. The hefty increase observed in April reflected that businesses passed on to consumers the burden of the sales tax hike that was introduced in April.

Core inflation for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—inched up from 2.7% in April to 2.8% in May, falling just short of the 2.9% that market analysts had expected.

The Bank of Japan (BoJ) expects that core inflation will be between 3.0% and 3.5% in the fiscal year ending March 2015. In the following fiscal year, the BoJ sees inflation falling to between 1.9% and 2.8%. FocusEconomics Consensus Forecast panelists expect inflation of 2.5% in the calendar year 2014, which is unchanged from last month’s estimate. In 2015, the panel sees inflation at 1.6%.


Author: Ricard Torné, Lead Economist

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Japan Inflation April 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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