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Free AccessMNI POLICY: Japan March CPI Drop Slows On Energy
The decline in the Japan's core consumer price index slowed in March due to a smaller negative contribution from energy items and came as no surprise to Bank of Japan officials who expected the impact after past falls in crude oil prices, MNI understands.
Bank officials expect the negative contribution from energy items to turn positive in or after April, easing downward pressure from lower mobile phone fees on CPI after April.
The drop of mobile phone fees will increase people's real purchasing power, stimulating private consumption.
Bank officials maintain the view that the inflation rate is expected to be in negative territory for the time being.
They do not expect the weaker consumer price index to affect inflation expectations but are keeping a close eye on the expected inflation rate.
The nationwide core CPI fell 0.1% y/y in March for the eighth straight month after falling 0.4% in February. The smaller drop was expected as the Tokyo March CPI, a leading indicator of nationwide CPI, slowed to -0.1% from -0.3% in February.
CORE-CORE CPI RISES
January core-core CPI, excluding fresh food and energy items - the BOJ's preferred gauge of the underlying trend – rose 0.3% y/y in March after rising 0.2% in February.
Overall accommodation prices were unchanged y/y in March, narrowing from -5.1% in February. The contribution from accommodation turned to +0.06 percentage point from -0.06 pp in February.
Service prices rose 0.1% y/y in March after rising 0.1% in February. Prices for eating out, another key BOJ focus, rose 0.2% y/y in March following +0.3% in February, indicating corporate price cuts hadn't expanded.
Prices for processed foods, accounting for 15% of the total CPI on which BOJ officials focus and which are sensitive to the economic climate, were unchanged y/y in March, up from a -0.1% fall in February.
Prices for household durable goods rose 4.4% y/y in March, accelerating from +3.1% in February and reflected the continued firm demand for goods.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.