Japan: Core inflation surges to 32-year high on tax increase in May
June 27, 2014
In May, the core consumer price index, which excludes volatile fresh food prices, rose 0.4% over the previous month, which was well below the 2.2% increase recorded in April. The hefty rise observed in April reflected that businesses passed the burden of the 1 April sales tax hike on to consumers. May’s print was mainly underpinned by a large jump in prices for fuel, light and water charges.
Annual core inflation rose from 3.2% in April to 3.4% in May, which represented the highest reading since 1982. That said, May’s reading was in line with market expectations. Overall inflation rose from 3.4% in April to 3.7% in May, which also marked a multi-year high.
Core inflation for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—was stable at the previous month’s 2.8% in June, which was in line with market expectations.