Japan Inflation


Japan: Core prices fall slightly in February

March 25, 2011

In February, the core consumer price index, which excludes volatile fresh food prices, fell 0.1% over the previous month. The figure, which came in above January's 0.4% drop, matched market expectations. Nevertheless, annual core inflation reversed the upward trend seen over the previous months, stepping down from minus 0.2% in January to minus 0.3% in February. The overall consumer price index also dropped 0.1% over the previous month (January: -0.2% mom). The driver behind the drop was mainly lower food prices, in particular fresh food (-0.9% mom), which were totally offset by increases in fuel (+3.5% mom) and private transportation (+0.4% mom). Annual inflation remained flat since December, reflecting anemic private consumption, which compensates for the impact of rising commodities prices. Analysts expect that inflation may inch up in March as the devastating earthquake and subsequent tsunami resulted in power shortages and disrupted distribution networks. The Bank of Japan (BoJ) expects the year-on-year rate of change to become slightly positive in the near future.


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