Tokyo Headline CPI Moderates Further, Core/Services Inflation Proving To Be Stickier

Tokyo August CPI was a touch below expectations in terms of the headline. We printed at 2.9% y/y, versus 3.0% projected and 3.2% prior. The ex fresh food measure also came in below expectations at 2.8% y/y (2.9% forecast and 3.0% prior). The headline measures are largely evolving as expected, now comfortably off early 2023 peaks (4.4% y/y for headline). The ex fresh-food, energy measure was in line with consensus though at 4.0% y/y, which was also the prior outcome and remains at cyclical highs. The core measure which strips out all food and energy ticked higher to 2.6% y/y from 2.5% in July.

• In m/m terms, we were +0.1% (seasonally adjusted), while ex fresh-food we were 0.2% m/m (prior 0.2%), while ex fresh food and energy printed at 0.3% m/m (prior 0.4%). The ex food and energy m/m print was 0.4%, similar to last month's 0.5%.
• Looking at the sub-sectors, fresh food -1.3%, utilities -3.5% and household goods -0.4% were the main disinflationary forces. Offsets came from entertainment +2.1% and transport, communication +0.8%.
• In y/y terms, outside of utilities -15.0%, the sub-sectors maintained firm y/y momentum for the most part. Entertainment +5.7%, and transport, communication +3.6%, are likely to remains BoJ watch points in terms sticky to firmer services related inflation pressures.