JAPAN DATA: Tokyo CPI Above Expectations, Aided By Utilities, Core Measures Firm

Tokyo Nov CPI prints were above market expectations in terms of the headline measure. It rose 2.6%y/y, versus 2.2% forecast and 1.8% prior. The core measures were mixed but still showed positive y/y momentum. The ex fresh food measure was up 2.2%y/y (against a 2.0% forecast and 1.8% prior). The measure which also excludes energy prices was 1.9% y/y, same as forecast but still a tick up on Oct's 1.8% outcome. These metrics are in the chart below. 

• In terms of the detail, for m/m outcomes the headline rose 0.5%, same as Oct, the core ex fresh food was 0.5%, ex energy at 0.3%. Good prices rose 0.8%, while services prices were up 0.2%m/m after a 0.4% gain in Oct.
• By sub-category the utilities component rose 3.6%m/m, as reduced energy subsidies impacted. Household goods were -0.5% and entertainment fell -0.1% after a 1.1% rise in Oct. This reduces the hawkishness of the print, albeit at the margins.
• In y/y terms, utilities were up 6.5%y/y, from 2.4% prior. Fresh food rose to 10.6% from 2.1%. Still most other sub categories saw firmer y/y momentum compared to Oct.
• Going forward, energy subsidies will be reintroduced in Jan, so this will impact headline CPI, albeit with a lag.
• Overall, the data should firm the BoJ's confidence in sustainably achieving the 2% inflation target.
• Other data showed a slight uptick in the unemployment rate to 2.5% for Oct, but this was forecast (prior was 2.4%). The job to applicant ratio did rise though to 1.25 from 1.24. The number of people employed rose +160k, versus a -90k dip in Sep. 

Fig 1: Tokyo CPI Y/Y Momentum Improves, Led By Utilities, Core Measures Also Up