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Headline CPI A Touch Higher, Core Measures In Line With Market Expectations


Japan June national CPI has printed broadly in line with market expectations. The headline was at 3.3%, a touch above market expectations of 3.2% (and 3.2% prior). The ex fresh food measure was in line at 3.3% (prior 3.2%), while ex fresh food and energy was also as expected at 4.2% (prior 4.3%).

  • Headline CPI y/y has held sticky above 3.0% in recent months, although base effects turn more favorable as we progress through Q3, which may at least prevent a re-acceleration in y/y momentum as we progress through H2 (if not some further downside).
  • The core measure (ex fresh food) is showing a similar trajectory, while the measure which excludes energy as well is just a touch off recent highs at 4.2% y/y.
  • Note the core measure which excludes all food and energy was +2.6% y/y, unchanged from May. It was down -0.2% in non-seasonally adjusted terms for the month.
  • In terms of the sub-indices, fresh food was down -3.0% m/m, while household goods, clothing and footwear and entertainment also fell in m/m terms. In y/y terms, momentum held positive outside of utilities.
  • From a BoJ standpoint, the current inflation outlook is set be revised higher at next week's BoJ policy meeting. The government raised its inflation projections higher for the current financial year yesterday, with headline projected at 2.6% (up from the 1.7% projected in January).
  • No policy tweaks are expected at next week's meeting, but our policy team noted yesterday, the BoJ's longer term policy outlook is likely to be in focus (see this link).

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