August 2021 Consumer Price Index

◆Japan’s August 2021 core CPI (excluding fresh foods) was at 0.0% y/y. upward pressure from energy weakened, while downward pressure also weakened due to the residual influence of the Go To Travel Campaign, narrowing the range of decline in comparison to the previous month (-0.2%). Meanwhile, new core-core CPI (excluding fresh foods and energy), also its range of decline narrow to -0.5% in comparison to the -0.6% of July. Prices continue to maintain underlying strength excluding the influence of special factors.

◆Looking at year-to-year performance by component in August, energy prices, which had been a major factor in pushing up overall performance saw their range of increase narrow. On the other hand, services overall saw downward pressure weaken, with increase in accommodations partially offset by a decline in mobile phone communication fees (mobile phone charges).

◆As for the future of Japan’s core CPI, positive and negative factors are expected to continue competing, with moderate growth continuing. Major positive factors will likely be the residual influence of the 2020 Go To Travel Campaign, and rising production costs for corporations. Meanwhile, if the request for shortened business hours or leave of absence on the part of restaurants and bars due to the spread of mutant strains of COVID-19 is canceled, demand for services requiring face-to-face contact and mobility will begin to make a comeback, and prices also may gradually move upwards. On the other hand, the influence of cuts in mobile phone communication fees is expected to continue holding down growth in prices.