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JAPAN DATA: Tokyo CPI Headline Softens, But Services M/M Up Firmly

JAPAN DATA
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Japan's Tokyo CPI was as expected for the headline print, 1.8% y/y (prior 2.1%). The core measures were a touch above expectations though, +1.8%y/y for the ex fresh food measure (1.7% forecast and 2.0% prior), while the core ex fresh food, energy measure was 1.8%y/y against a 1.6% forecast (which was also the prior outcome). 

  • In m/m terms, headline CPI rose 0.5% after a 0.3% dip in Sep. The core measures were also up 0.4%m/m for ex fresh food and 0.5% for ex fresh food and energy. Good prices rose 0.5%, while services, key watch point for the BoJ, rose 0.4% m/m. This looks to be the strongest monthly rise going back to early 2021. In y/y terms were up 0.8% from 0.6% prior.
  • This gain appear to reflect a 1.2%m/m rise in entertainment prices (after falling -2.1% in Sep), while medical expenses also rose 0.6%m/m, after a 0.1% rise prior.
  • Elsewhere, food prices stayed firm at +1.4%m/m, while utilities also rose 0.8%m/m.
  • In y/y terms, we didn't see sharp swings in the underlying components, outside of utilities falling to 2.4%y/y from 9.0%.
  • The base effects slow from above 3% y/y from Q3 2024 to sub 2% early 2024. This should help stabilize y/y momentum as we progress into early 2025.
  • This won't shift BoJ thinking for next week's policy meeting but the services inflation backdrop will be a watch point. 
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Japan's Tokyo CPI was as expected for the headline print, 1.8% y/y (prior 2.1%). The core measures were a touch above expectations though, +1.8%y/y for the ex fresh food measure (1.7% forecast and 2.0% prior), while the core ex fresh food, energy measure was 1.8%y/y against a 1.6% forecast (which was also the prior outcome). 

  • In m/m terms, headline CPI rose 0.5% after a 0.3% dip in Sep. The core measures were also up 0.4%m/m for ex fresh food and 0.5% for ex fresh food and energy. Good prices rose 0.5%, while services, key watch point for the BoJ, rose 0.4% m/m. This looks to be the strongest monthly rise going back to early 2021. In y/y terms were up 0.8% from 0.6% prior.
  • This gain appear to reflect a 1.2%m/m rise in entertainment prices (after falling -2.1% in Sep), while medical expenses also rose 0.6%m/m, after a 0.1% rise prior.
  • Elsewhere, food prices stayed firm at +1.4%m/m, while utilities also rose 0.8%m/m.
  • In y/y terms, we didn't see sharp swings in the underlying components, outside of utilities falling to 2.4%y/y from 9.0%.
  • The base effects slow from above 3% y/y from Q3 2024 to sub 2% early 2024. This should help stabilize y/y momentum as we progress into early 2025.
  • This won't shift BoJ thinking for next week's policy meeting but the services inflation backdrop will be a watch point.