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Y/Y CPI Softer Than Expected, M/M Picks Up Though

JAPAN DATA
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Japan March national CPI was weaker than expected. The major indices all slightly below consensus expectations and showing softer y/y momentum relative to Feb. Headline was 2.7% y/y (against a forecast and prior outcome of 2.8%). Ex fresh food was 2.6% y/y (2.7% forecast and 2.8% prior). The core ex fresh food and energy measure printed 2.9% y/y (3.0% forecast and 3.2% prior).

  • Softer y/y momentum was expected by the market, albeit with the actual outcomes coming below estimates.
  • In terms of the detail, in y/y terms the core measure which excludes all food and energy eased back to 2.2% from 2.5% in Feb. By category, we saw either lower or steady y/y momentum for most sub-components. Strongest inflation remains for entertainment (+7.2%y/y) and food 4.8%y/y.
  • In m/m terms we still saw 8 out of the 11 sub-components record a firmer pace compared with Feb. In Feb we had 5 out of 11 sub-components record a firmer pace relative to Jan. In March, Food prices rebounded, as did utilities and clothing & footwear. Transport (-0.1% m/m) was the only negative result.
  • Base effects are likely to weigh on y/y momentum as we progress through Q2 and into Q3. Still, with some pick up in m/m momentum, coupled with focus on wage gain pass through, today's y/y misses may not shift the BoJ outlook a great deal. Note next Friday delivers the next meeting outcome from the central bank.
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Japan March national CPI was weaker than expected. The major indices all slightly below consensus expectations and showing softer y/y momentum relative to Feb. Headline was 2.7% y/y (against a forecast and prior outcome of 2.8%). Ex fresh food was 2.6% y/y (2.7% forecast and 2.8% prior). The core ex fresh food and energy measure printed 2.9% y/y (3.0% forecast and 3.2% prior).

  • Softer y/y momentum was expected by the market, albeit with the actual outcomes coming below estimates.
  • In terms of the detail, in y/y terms the core measure which excludes all food and energy eased back to 2.2% from 2.5% in Feb. By category, we saw either lower or steady y/y momentum for most sub-components. Strongest inflation remains for entertainment (+7.2%y/y) and food 4.8%y/y.
  • In m/m terms we still saw 8 out of the 11 sub-components record a firmer pace compared with Feb. In Feb we had 5 out of 11 sub-components record a firmer pace relative to Jan. In March, Food prices rebounded, as did utilities and clothing & footwear. Transport (-0.1% m/m) was the only negative result.
  • Base effects are likely to weigh on y/y momentum as we progress through Q2 and into Q3. Still, with some pick up in m/m momentum, coupled with focus on wage gain pass through, today's y/y misses may not shift the BoJ outlook a great deal. Note next Friday delivers the next meeting outcome from the central bank.