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JAPAN DATA: Tokyo CPI Below Forecasts On Lower Food & Utility Prices

JAPAN DATA
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Japan's Feb Tokyo CPI print came in below expectations. The headline printed at 2.9%y/y, against a 3.2% forecast and prior outcome of 3.4%. Ex fresh food was 2.2%y/y (forecast of 2.3% and 2.5% prior). The ex fresh food, energy measure was 1.9%y/y, unchanged from Jan, but under the 2.0% forecast. The trends of these indices are presented in the chart below.

  •  In m/m terms headline CPI fell 0.3% (seasonally adjusted), with goods prices down -0.6%, after a 1.2% gain prior. Services rose 0.1%, after a modest fall in Jan. The core ex all food and energy measure also rose 0.2%m/m, offsetting Jan's 0.2% dip. This is not in seasonally adjusted terms though.
  • Food prices fell -0.8% m/m (with fresh food down -5.6%), while utilities were off by -4.9%m/m. This owed to government subsidies impacting energy prices.
  • Other components were mixed, with household goods and clothing recovering from Jan dips. Entertainment rose 0.5% after falling 1.7%m/m in Jan. Medical care and transport were flat though.
  • In y/y terms, most components saw softer y/y outcomes relative to the Jan print. The strongest y/y pace remains food and utilities, education the weakest.
  • The softer food print will likely be welcome by the authorities, with BoJ Governor Ueda noting it was a watch point recently. Underlying trends still look favorably for broader inflation (the core-core print was still close to 2%), but today's outcome is unlikely to generate a hawkish market reaction in terms of the BoJ outlook. 

Fig 1: Tokyo CPI Y/Y Trends - Feb Momentum Slowed, Aided By Lower Food & Utility Prices 

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Japan's Feb Tokyo CPI print came in below expectations. The headline printed at 2.9%y/y, against a 3.2% forecast and prior outcome of 3.4%. Ex fresh food was 2.2%y/y (forecast of 2.3% and 2.5% prior). The ex fresh food, energy measure was 1.9%y/y, unchanged from Jan, but under the 2.0% forecast. The trends of these indices are presented in the chart below.

  •  In m/m terms headline CPI fell 0.3% (seasonally adjusted), with goods prices down -0.6%, after a 1.2% gain prior. Services rose 0.1%, after a modest fall in Jan. The core ex all food and energy measure also rose 0.2%m/m, offsetting Jan's 0.2% dip. This is not in seasonally adjusted terms though.
  • Food prices fell -0.8% m/m (with fresh food down -5.6%), while utilities were off by -4.9%m/m. This owed to government subsidies impacting energy prices.
  • Other components were mixed, with household goods and clothing recovering from Jan dips. Entertainment rose 0.5% after falling 1.7%m/m in Jan. Medical care and transport were flat though.
  • In y/y terms, most components saw softer y/y outcomes relative to the Jan print. The strongest y/y pace remains food and utilities, education the weakest.
  • The softer food print will likely be welcome by the authorities, with BoJ Governor Ueda noting it was a watch point recently. Underlying trends still look favorably for broader inflation (the core-core print was still close to 2%), but today's outcome is unlikely to generate a hawkish market reaction in terms of the BoJ outlook. 

Fig 1: Tokyo CPI Y/Y Trends - Feb Momentum Slowed, Aided By Lower Food & Utility Prices 

Keep reading...Show less