10% Trimmed CPI Japan

Trimmed CPI measures show a continued rise in trend inflation rate.

Published monthly by Japan Macro Advisors. National Trimmed Mean CPI is updated to the month of November (published on November 22nd, 2019) and Tokyo Trimmed mean CPI is updated to the month of November 2019 (published on November 29th, 2019)

Recent data trend

In August 2018, the year-on-year 10% Trimmed CPI inflation increased to 0.53% YoY from 0.49% YoY in the month of July. Food and dairy products, compact disc, automobile parts and gasoline were items that raised the official CPI but excluded from our trimmed CPI measure. On the other hand, processed food items, household appliances items such as vacuum cleaners, washing machines, telephone sets and computer accessories like PC printers were the items that lowered the official CPI inflation but excluded from our trimmed CPI measure.

As per our trimmed CPI measures, the trend inflation is continuing to rise in Japan with little dip in between. While it is a positive news for the Bank of Japan, the distance to 2% target is still a factor that favours adopting more stimulus measures.

Brief overview of “10% Trimmed CPI”

10% trimmed CPI series aims to track the trend in the CPI inflation by removing its volatile components. All the items in the CPI are ranked by their year-on-year rate of price change and the highest and lowest 10 percentiles by weight are removed, leaving the 80% “core” components of the CPI inflation. Various research suggests that trimmed CPI is the best indicator of the medium-term trend in the CPI inflation. Some central banks, such as RBA, are starting to adopt the series as officially monitored series. The Japanese government does not officially publish the series.

The methodology and references for 10% trimmed CPI

The Next Release Date: December 27th, 2019 

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