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Headline CPI As Expected, Core (Ex Fresh Food & Energy) Slightly Below Estimates


April CPI for Japan hasn't produced any meaningful shocks, although some of the detail showed some pick up in services inflation.

  • The headline printed at 3.5% y/y, as expected, and versus 3.2% in March. Ex fresh food was also as expected at 3.4%y/y, prior 3.1%. The measure which also excludes energy came in at 4.1%, a touch below expectations (4.2%), but still up on the prior 3.8%. This is also a fresh high going back to 1981.
  • The core measure which excludes all food and energy ticked up to 2.5% y/y, from 2.3% prior.
  • In m/m terms most measures pick up versus the March pace. Interestingly, service inflation was +0.2%, after being flat for the past 6 months. Goods inflation picked up to 0.8% from 0.3% prior.
  • Education and entertainment inflation picked up noticeably in April, with services inflation more broadly needed to help the BoJ reach its inflation target sustainably.
  • The market reaction has been fairly muted to these prints though. USD/JPY drifting back higher 138.65/70, versus earlier lows around 138.50/55.

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