Jan National CPI Stronger Than Forecast, Services Inflation Rises 0.4% M/M

Japan Jan CPI was stronger than expected in y/y terms. National CPI printed 2.2% y/y versus 1.9% est. and 2.6% prior. The Core and Core-Core measures also surprised on the high side, printing 2.0% y/y and 3.5% y/y respectively versus expectations of 1.9% and 3.3% and prior 2.3% and 3.7%.

• In m/m terms, the headline was flat, while ex fresh food was 0.1%, and ex fresh-food and energy was 0.2%, Good prices fell -0.1%, while services rose 0.4%, after a flat Dec outcome (all of these prints are in seasonally adjusted terms).
• In terms of the sub sectors, food prices rebounded (+0.4% from -0.4% prior), while most other categories were either flat or rose 0.1-0.2% m/m. The main exception being a continued drag from clothing and footwear (-1.6%).
• In y/y terms, most sub indices saw lower y/y momentum in line with the headline result. Sticky or elevated pressures are evident for food (near 6% y/y), along with household goods, +6.5% and entertainment (+6.8%). The biggest drag is from utilities still, -13.9% y/y.
• At the margin, the data will be hawkish for the BoJ outlook, given the uptick in services inflation for the month.