Japan Inflation March 2016

Japan

Japan: Core prices drop in March at fastest pace in nearly three years

April 28, 2016

In March, the core consumer price index rose 0.1% compared to the previous month, which was above the flat reading tallied in February. The print mainly reflected that much higher prices for clothes and footwear more than offset lower prices for fuel, light and water charges.

Core prices in March were down 0.3% over the same month last year, which was below the zero growth tallied in February. The print undershot the 0.2% decrease predicted by market analysts and represented the steepest drop since April 2013. Overall consumer prices in March fell from a 0.3% increase in February to a 0.1% decline.

Core prices for Tokyo—available one month in advance of the national figures and thus a leading indicator for countrywide inflation—fell 0.4% in April over the same month of the previous year (March: -0.3% year-on-year), which exceeded the 0.2% drop 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%, excluding the effects of the expected consumption tax hike in April 2017. FocusEconomics Consensus Forecast panelists expect inflation of 0.3% in the calendar year 2016, which is unchanged from last month’s estimate. In 2017, the panel sees inflation at 1.6%.


Author: Ricard Torné, Lead Economist

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Japan Inflation March 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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