Japan Inflation May 2016


Japan: Core prices decline at fastest pace in over three years in May

July 1, 2016

In May, the core consumer price index rose 0.1% compared to the previous month, which was below the 0.3% rise tallied in April. The print mainly reflected higher prices for culture and recreation, furniture and household utensils as well as for fuel, light and water charges.

Core prices in May were down 0.4% over the same month last year, which exceeded the 0.3% drop tallied in the previous month. The print matched the result predicted by market analysts and represented the steepest drop since April 2013. Overall consumer prices fell from a 0.3% year-on-year decline in April to a 0.4% decrease in May.

Core prices for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—fell 0.5% in June over the same month of the previous year (May: -0.5% year-on-year), which was in line with the result that market analysts’ had expected.

The Bank of Japan (BoJ) expects that core inflation will be between 0.0% and 0.8% in the fiscal year ending March 2017. In the following fiscal year, the BoJ sees inflation between 1.8% and 3.0% and somewhere between 0.8% and 2.0% when excluding the effects of the expected consumption tax hike in April 2017. FocusEconomics Consensus Forecast panelists expect inflation of 0.1% in the calendar year 2016, which is down 0.1 percentage points from last month’s estimate. In 2017, the panel sees inflation at 1.1%.

Author: Ricard Torné, Lead Economist

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Japan Inflation Chart

Japan Inflation May 2016

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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