Japan Consumer Price Index

In January 2017, CPI excluding fresh food index rose by 0.1% year on year, a first positive year on year inflation rate since December 2015.

Published monthly by the Ministry of Internal Affairs and Communication. Updated to the month of January/February2017 (published on March 3rd, 2017).

Recent data trend:

In January 2017, the year on year inflation measured in CPI excluding fresh food turned positive, ending a year-long deflationary trend in Japan. Throughout 2015 and 2016, the severe decline in energy prices had pulled the inflation rate down. At its severest in early 2016, energy prices were falling by 13.4% YoY. By January 2017, energy prices have virtually stopped falling year on year.

Does the absence of deflationary energy prices mean that the inflation rate in Japan will start to rise? Not necessarily. Even outside the energy prices, the trend inflation in Japan have been on a slight deceleration trend. CPI excluding fresh food and energy have been decelerating from the peak of 0.9% YoY in November 2015 to 0.1% YoY in January 2017. Trimmed CPI, a measure to show medium term trend inflation also suggest that the trend inflation is close to zero. While the Bank of Japan maintains its 2% inflation target, the path for its achievement remain unclear. For now, the inflation rate in Japan seems stuck to zero, waiting for an economic shock to drive it either upward or downward.

Brief overview of “Consumer Price Index”

Consumer Price Index (CPI) measures the weighted average price level of goods and services consumers pay. Its weights are determined by the spending pattern of household in a standard year, currently set at 2015. The Bank of Japan targets its core measure, CPI excluding fresh food. The US-styled core measure, CPI excluding food and energy, is also published in the official statistics release. The government currently does not officially publish trimmed CPI measures. Monthly CPI reports are published toward the end of the following month. The preliminary CPI report for Tokyo area is published one month in advance and it is often regarded as a leading indicator for the national CPI.

Since late 1990s, CPI in Japan has been on a very mild declining trend. Between 1998 and 2012, CPI fell by 3.9% or by 0.3% per year on average. Excluding food and energy, CPI declined by 6.4%, or by 0.6% per year on average in the same period. Japan had unusually lower CPI inflation than its global peers even prior to 1998. Between 1980 to 2000, average yearly inflation in Japan was 1.4%, sizably lower than the average of 3.6% in G7 countries.

For more information, visit the official government page

National CPI by item

Source: MIAC, JMA.

Source: MIAC, JMA.

CPI and Sub-Components

Source: MIAC, JMA.

The Next Release Date:  March 31st, 2017.

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