| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| CPI - Y/Y | 2.8% | 2.7% to 2.9% | 2.7% | 3.1% |
| Ex-Fresh Food - Y/Y | 2.7% | 2.7% to 2.8% | 2.7% | 3.1% |
| Ex-Fresh Food & Energy - Y/Y | 3.3% | 3.2% to 3.4% | 3.3% | 3.4% |
Highlights
JAPAN AUG CORE CPI (EXCLUDING FRESH FOOD) +2.7 Y/Y, 48TH STRAIGHT RISE (JULY +3.1%); MEDIAN FORECAST +2.7%
JAPAN AUG CORE INFLATION UP Y/Y ON EASING ELEVATED PROCESSED FOOD COSTS POST RICE SUPPLY SHORTAGES; ENERGY DROP DEEPENS ON FUEL SUBSIDIES
JAPAN AUG TOTAL CPI +2.7% Y/Y, 48TH STRAIGHT RISE (JULY +3.1%); MEDIAN FORECAST +2.8%
JAPAN AUG CORE-CORE CPI (EX-FRESH FOOD, ENERGY) +3.3% Y/Y, 41ST STRAIGHT RISE (JULY +3.4); MEDIAN FORECAST +3.3%; ABOVE 3% FOR 4 MTHS IN A ROW
JAPAN AUG CPI: PROCESSED FOOD +8.0% (+1.90 POINT) VS. +8.3% (+1.98 PT) IN JULY
JAPAN AUG CPI: ENERGY PRICES -3.3% Y/Y (-0.27 POINT VS. -0.3% (-0.03 PT) IN JULY
JAPAN AUG CPI SERVICES (EX-OWNERS' EQUIVALENT RENT) +2.1% VS. +2.1% IN JULY; GOODS (EX-FRESH FOOD) +3.8% VS. +4.6%
JAPAN AUG CPI: WAGE GROWTH STILL LAGS BEHIND HIGH COSTS FOR PROCESSED FOOD, UTILITIES, LIKELY KEEPING PRIVATE CONSUMPTION SLUGGISH IN Q3 GDP
JAPAN AUG CORE INFLATION UP Y/Y ON EASING ELEVATED PROCESSED FOOD COSTS POST RICE SUPPLY SHORTAGES; ENERGY DROP DEEPENS ON FUEL SUBSIDIES
JAPAN AUG TOTAL CPI +2.7% Y/Y, 48TH STRAIGHT RISE (JULY +3.1%); MEDIAN FORECAST +2.8%
JAPAN AUG CORE-CORE CPI (EX-FRESH FOOD, ENERGY) +3.3% Y/Y, 41ST STRAIGHT RISE (JULY +3.4); MEDIAN FORECAST +3.3%; ABOVE 3% FOR 4 MTHS IN A ROW
JAPAN AUG CPI: PROCESSED FOOD +8.0% (+1.90 POINT) VS. +8.3% (+1.98 PT) IN JULY
JAPAN AUG CPI: ENERGY PRICES -3.3% Y/Y (-0.27 POINT VS. -0.3% (-0.03 PT) IN JULY
JAPAN AUG CPI SERVICES (EX-OWNERS' EQUIVALENT RENT) +2.1% VS. +2.1% IN JULY; GOODS (EX-FRESH FOOD) +3.8% VS. +4.6%
JAPAN AUG CPI: WAGE GROWTH STILL LAGS BEHIND HIGH COSTS FOR PROCESSED FOOD, UTILITIES, LIKELY KEEPING PRIVATE CONSUMPTION SLUGGISH IN Q3 GDP
Market Consensus Before Announcement
Consumer inflation in Japan is expected to continue slowing in August to around 3% in two key measures, thanks to retail gasoline subsidies which has offset the continued uptick in processed food costs.
The core reading (excluding fresh food) is forecast to post a 2.7% rise on year in August after its annual rate decelerated to 3.1% in July from 3.3% in June. The year-on-year rise in the total CPI is also seen at 2.8%, easing further from 3.1%. The underlying inflation measured by the core-core CPI (excluding fresh food and energy) is estimated at 3.3% vs. 3.4% in the previous two months.
The yen’s rise from last year’s slump has also lowered import costs, triggering a pullback in spending by visitors from overseas who lost their currencies’ competitive edge over the yen.
The impact of slowing overall energy price gains (gasoline has been down) has been mitigated by elevated processed food prices despite gradually easing domestic rice supply shortages (regular rice still costs nearly double the price seen a year earlier) as well as higher mobile phone charges.
The core reading (excluding fresh food) is forecast to post a 2.7% rise on year in August after its annual rate decelerated to 3.1% in July from 3.3% in June. The year-on-year rise in the total CPI is also seen at 2.8%, easing further from 3.1%. The underlying inflation measured by the core-core CPI (excluding fresh food and energy) is estimated at 3.3% vs. 3.4% in the previous two months.
The yen’s rise from last year’s slump has also lowered import costs, triggering a pullback in spending by visitors from overseas who lost their currencies’ competitive edge over the yen.
The impact of slowing overall energy price gains (gasoline has been down) has been mitigated by elevated processed food prices despite gradually easing domestic rice supply shortages (regular rice still costs nearly double the price seen a year earlier) as well as higher mobile phone charges.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Annual changes in the CPI represent the rate of inflation.
Description
The CPI has been in the spotlight as Japan struggled to make its way out of deflation. The report tracks changes in the price of a basket of goods and services that a typical Japanese household might purchase. The preferred measure is the year over year percent change. Markets will typically pay more attention to the core measure that excludes only fresh food because volatile food prices can distort overall CPI. A second core measure that excludes energy as well is also available. As the most important inflation indicator, the CPI data are closely monitored by the Bank of Japan. Rising consumer prices may prompt the BoJ to raise interest rates in order to manage inflation and slow economic growth. Higher interest rates make holding the yen more attractive to foreign investors, and this higher level of demand will place upward pressure on the value of the yen.
An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to government securities. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
