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Tokyo CPI Slightly Below Expectation, Headline Above 2% Y/Y

JAPAN DATA
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Japan's July Tokyo CPI print was a little below forecasts. Headline 2.2% y/y (2.3% was forecast), ex fresh food as expected at 2.2%, while ex fresh food and energy was 1.5%y/y (1.6% forecast and 1.8% prior).

  • The chart below plots the three metrics, with the core ex fresh food and energy in yellow. In recent years this metric has tended to lag the other two measures. Headline and core (ex fresh food) have had an average around 2% y/y since the start of this year.
  • In m/m terms, headline was up 0.1% (versus 0.3% prior). the ex fresh food measure was 0.3% similar to the pace of the past two months. Good prices rose 0.3%, services were flat. In y/y terms services eased to 0.5% from 0.9% in June.
  • By category, food and fresh food prices fell. Housing, utilities and household goods saw lower m/m outcomes compared to June. Clothing fell -1.0%m/m, while the strongest rise in m/m terms was entertainment at +1.3%, reversing the prior month's dip. Y/Y trends were mixed. Utilities up +12.6%y/y, but education a drag at -9.2%y/y.
  • On balance, the data isn't likely to shift BoJ thinking greatly ahead of next week's meeting. CPI is close to the BoJ's target, but services price pressures are by no means painting a hawkish picture at this stage.

Fig 1: Tokyo CPI July Trends Mixed

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Japan's July Tokyo CPI print was a little below forecasts. Headline 2.2% y/y (2.3% was forecast), ex fresh food as expected at 2.2%, while ex fresh food and energy was 1.5%y/y (1.6% forecast and 1.8% prior).

  • The chart below plots the three metrics, with the core ex fresh food and energy in yellow. In recent years this metric has tended to lag the other two measures. Headline and core (ex fresh food) have had an average around 2% y/y since the start of this year.
  • In m/m terms, headline was up 0.1% (versus 0.3% prior). the ex fresh food measure was 0.3% similar to the pace of the past two months. Good prices rose 0.3%, services were flat. In y/y terms services eased to 0.5% from 0.9% in June.
  • By category, food and fresh food prices fell. Housing, utilities and household goods saw lower m/m outcomes compared to June. Clothing fell -1.0%m/m, while the strongest rise in m/m terms was entertainment at +1.3%, reversing the prior month's dip. Y/Y trends were mixed. Utilities up +12.6%y/y, but education a drag at -9.2%y/y.
  • On balance, the data isn't likely to shift BoJ thinking greatly ahead of next week's meeting. CPI is close to the BoJ's target, but services price pressures are by no means painting a hawkish picture at this stage.

Fig 1: Tokyo CPI July Trends Mixed

Keep reading...Show less