October 2023 Consumer Price Index

Underlying price shows a stronger tendency toward slowing down


November 24, 2023

  • Shotaro Kugo
  • Kanako Nakamura


◆Japan’s October 2023 core CPI (excluding fresh food) recorded +2.9% y/y. New core-core CPI (excluding fresh food and energy) was at +4.0%. The seasonally adjusted figure for new core-core CPI (seasonally adjusted by Laspeyres' Chain Index Method), was at +0.1% m/m (1.1% m/m annualized). Looking at the three-month moving average, the growth rate has contracted significantly from the previous month, and the underlying pace of price increases has been showing a stronger tendency toward slowing down.

◆Looking at the y/y change in core CPI in terms of goods and services, the positive range increased for durable consumer goods and services. Energy experienced a decrease in negative range due to the reduction in subsidies associated with measures to prevent high energy costs. Meanwhile, semi-durables and non-durables (excluding fresh food and energy) saw a decrease in positive range.

◆As for the future of Japan’s core CPI (excluding fresh food), growth of +2.8% y/y is expected in FY2023, with the same rate of growth (+2.8%) also seen in FY2024. As for new core-core CPI, +3.9% is seen in FY2023 and + 1.9% in FY2024. With further progress in price pass-through, and a wage increase rate of the same level or higher as the previous year expected in spring wage negotiations in 2024, the cyclical growth mechanism of wages and prices is expected to function reliably. In addition to overcoming deflation, we expect the Bank of Japan to achieve its 2% price stability target.

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