I haven’t seen one of these from the Wall Street Journal for a while – their quick summary of a data point, today: 5 Takeaways on Japan’s Inflation Data (it doesn’t appear to be gated, either … thanksgiving bonus!). The data is here, if you missed it
- Japan’s fall into a technical recession in the third-quarter has deflated hopes of price increases, a much awaited signal of revival for the world’s third-largest economy
- The core consumer price index, which excludes fresh food and the impact of a three-percentage point tax increase from April—rose 0.9% y/y
- Its lowest level in a year & far short of the BOJ’s 2% target
1 What Core CPI Below 1% Mean
- If the inflation rate continues to fall, pressure could build again on the BOJ to take action
2 Inflation Could Fall Still Further
- The core CPI in the Tokyo metropolitan area for November, a leading indicator of next month’s nationwide figure, rose 0.5% on year, after adjusting for the tax increase… isn’t optimistic for next month
3 The Effect of Falling Oil Prices
- The fall in crude oil prices and weak domestic demand after April’s consumption-tax increase are among the biggest culprits
- BOJ has warned that plummeting crude oil prices could further weaken CPI and damp inflation expectations
4 This isn’t good news for Prime Minister Shinzo Abe
- A weak CPI reading will only give his opposition more ammunition
- … But, a recent poll showed Mr. Abe’s party has more than three times the level of support for the main opposition group
5 What Contributed to the Weak Reading?
- Falling crude-oil prices
- Drop in the price of rice and home-electrical appliances like air conditioners led to a lower core CPI reading