— Japan July Core CPI +0.1% Y/Y; June -0.2% Under New Formula
— Japan July Core CPI MNI Poll Median Forecast: Unchanged Y/Y
— Central Tokyo Aug CPI -0.2% Y/Y Vs July -0.1%
— Japan July CPI Energy Costs +6.1% Y/Y; June +4.9%

TOKYO (MNI) – Japan’s national core consumer prices rose 0.1% from
a year earlier in July, snapping 28 straight months of y/y drops and
posting the first gain since December 2008, data released Friday by the
Ministry of Internal Affairs and Communications showed.

Under the newly revised CPI formula, the nationwide core CPI, which
excludes fresh food but includes energy, still shows price gains are
weak, following a 0.2% fall in June, which was a downward revision from
a 0.4% rise, a third straight y/y rise under the previous formula.

The July core reading came in slightly higher than the median
economist forecast for unchanged in a Market News International survey.

The slight gain in July was supported by higher y/y prices in
gasoline, electricity and tobacco, which offset continued drops in
consumer electronics.

But if there’s any sign of deflation easing, it can be found in the
“culture and recreation” category, led by a smaller y/y drop in
flat-screen TV prices.

Televisions contributed to the slight gain in July core CPI as
declines in their prices slowed to -29.7% y/y in July from -33.7% in
June, reflecting strong demand last month, when Japan completely
switched to digital TV broadcasting from analogue.

Food excluding perishables also supported the core CPI rise in July
as higher costs of wheat pushed up prices of bread.

A week ago, the ministry said the year-on-year change in Japan’s
core CPI was pushed down by 0.7 percentage point on average in the
January-June period under the newly revised CPI formula.

In order to correct an upward bias that the fixed index tends to
show as time passes from the base year, the government updates the CPI
base year every five years, this time from 2005 to 2010.

It is also shuffling the product basket used in calculating CPI and
the weightings of goods and services in the basket to reflect
preferences for high-tech goods and diversifying lifestyles in a
fast-aging society.

Under the 2010 base year, the government is giving a significantly
larger weighting to consumer electronics in the basket of goods and
services used for calculating CPI.

Total national CPI rose 0.2% y/y in July following a 0.4% fall in
June, marking the first y/y rise in eight months.

Overall energy costs in July rose 6.1% y/y, after rising 4.9% in
June.

National CPI excluding food and energy, or the U.S. style core CPI,
fell 0.5% in July from a year earlier following a 0.8% fall in June.

Meanwhile, central Tokyo core CPI fell 0.2% year-on-year in August
after a 0.1% decline in July.

CPI figures date to 1970 under the 2010 base year.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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