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Tokyo CPI Well Below Expectations As Education Sub-Index Plunges

JAPAN DATA
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Tokyo's April CPI print was much weaker than expectations. The headline was 1.8% y/y, versus 2.5% projected (prior was 2.6%). The ex fresh food measure was 1.6% y/y, versus 2.2% forecast (2.4% prior). The ex fresh food, energy measure was 1.8% y/y in April (2.7% forecast and 2.9% prior).

  • Momentum on the core measures is back to 2022 levels, while headline printed 1.8%y/y back in January. The core ex energy and all food index eased back to 1.4% y/y from 2.3% in March.
  • The biggest drag by sub-sector came from education, down 9.4% m/m. This reflected the start of education subsidies in Tokyo. There was some uncertainty as to what the impact would be prior to the release. The plunge is not expected to be replicated at the nationwide CPI level (see this BBG link for more details).
  • Most other sub-categories were near their respective March outcomes. The main exception being household goods, up 2.4%m/m, versus a -0.7% fall in March.
  • in y/y terms, education fell -8.8%, versus a 1.9% y/y gain in March. 8 out of 11 sub-categories saw slower y/y momentum compared with March. Fresh food rose, along with housing, while the utilities drop became more modest at -3.0% y/y.
  • The sharp drop in education prices should help offset the market impact, although we continue to see some softening in y/y in most other sub-categories.
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Tokyo's April CPI print was much weaker than expectations. The headline was 1.8% y/y, versus 2.5% projected (prior was 2.6%). The ex fresh food measure was 1.6% y/y, versus 2.2% forecast (2.4% prior). The ex fresh food, energy measure was 1.8% y/y in April (2.7% forecast and 2.9% prior).

  • Momentum on the core measures is back to 2022 levels, while headline printed 1.8%y/y back in January. The core ex energy and all food index eased back to 1.4% y/y from 2.3% in March.
  • The biggest drag by sub-sector came from education, down 9.4% m/m. This reflected the start of education subsidies in Tokyo. There was some uncertainty as to what the impact would be prior to the release. The plunge is not expected to be replicated at the nationwide CPI level (see this BBG link for more details).
  • Most other sub-categories were near their respective March outcomes. The main exception being household goods, up 2.4%m/m, versus a -0.7% fall in March.
  • in y/y terms, education fell -8.8%, versus a 1.9% y/y gain in March. 8 out of 11 sub-categories saw slower y/y momentum compared with March. Fresh food rose, along with housing, while the utilities drop became more modest at -3.0% y/y.
  • The sharp drop in education prices should help offset the market impact, although we continue to see some softening in y/y in most other sub-categories.