MNI BRIEF: Japan Dec Core CPI Rises 2.3% Vs. Nov 2.5%

The y/y rise of Japan's annual core consumer inflation rate decelerated to 2.3% in December from November’s 2.5%, showing the pass-through of cost increases continues to weaken, data released by the Ministry of Internal Affairs and Communications showed on Friday.

December's index stayed above the Bank of Japan’s 2% target for the 21st consecutive month. The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) rose 3.7% y/y in December, also slowing from November's 3.8% and for the fourth straight deceleration.

The BOJ board is expected to lower its median forecast for core CPI in fiscal 2024 to around 2.5% from October’s 2.8%, following the drop of crude oil prices, however, it will likely keep the median forecast for core-core CPI in fiscal 2024 at 1.9%.

Services prices, a core focus for the BOJ to judge the wage-price cycle, rose 2.3% y/y in December, unchanged from November’s 2.3%. Bank officials are focused on wage hikes and they will increase upward pressure on services prices in or after April when businesses revise their prices. (See MNI POLICY: BOJ Mulls Framework Post Likely April Rate Liftoff)