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April National CPI Close To Expectations, Education Dip Weighs On Services

JAPAN DATA
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National CPI for April was fairly close to expectations. The headline printed at 2.5%y/y, versus 2.4% forecast and 2.7% prior. The ex fresh food measure was 2.2%y/y in line with estimates and versus 2.6% prior. The ex fresh food and energy measure was 2.4% y/y, also in line with expectations and against a 2.9% read in March. These measures are trending back towards earlier 2024 lows.

  • The measure which excludes all food and energy was 2.0% y/y, versus 2.2% in March.
  • In m/m terms we were up 0.2% for the headline, flat for the core measures (seasonally adjusted). Good prices rose 0.5% m/m, but services prices fell 0.1% (against flat last month).
  • The sub-categories were mixed, food and fresh food prices higher in y/y terms. Household goods and clothing also rose in m/m terms at a faster pace compared with March.
  • A big drag came from education, down -1.2% m/m, while medical care fell -0.3%. Both of these sub categories were up in March in m/m terms.
  • Our policy team noted: "Services CPI, a key BOJ focus, were 1.7% y/y in April, slowing from 2.1% in March and indicating that the rise in services prices is weaker than the Bank expected and the corporate price revisions in April were limited. " (see this link).
  • Focus going forward may be on whether the education and medical sub-categories reverse April weakness, which weighed on aggregate services inflation. Note next week we get Tokyo CPI for May.

Fig 1: Japan CPI Y/Y

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National CPI for April was fairly close to expectations. The headline printed at 2.5%y/y, versus 2.4% forecast and 2.7% prior. The ex fresh food measure was 2.2%y/y in line with estimates and versus 2.6% prior. The ex fresh food and energy measure was 2.4% y/y, also in line with expectations and against a 2.9% read in March. These measures are trending back towards earlier 2024 lows.

  • The measure which excludes all food and energy was 2.0% y/y, versus 2.2% in March.
  • In m/m terms we were up 0.2% for the headline, flat for the core measures (seasonally adjusted). Good prices rose 0.5% m/m, but services prices fell 0.1% (against flat last month).
  • The sub-categories were mixed, food and fresh food prices higher in y/y terms. Household goods and clothing also rose in m/m terms at a faster pace compared with March.
  • A big drag came from education, down -1.2% m/m, while medical care fell -0.3%. Both of these sub categories were up in March in m/m terms.
  • Our policy team noted: "Services CPI, a key BOJ focus, were 1.7% y/y in April, slowing from 2.1% in March and indicating that the rise in services prices is weaker than the Bank expected and the corporate price revisions in April were limited. " (see this link).
  • Focus going forward may be on whether the education and medical sub-categories reverse April weakness, which weighed on aggregate services inflation. Note next week we get Tokyo CPI for May.

Fig 1: Japan CPI Y/Y

Keep reading...Show less