January 2022 Consumer Price Index
Core CPI growth rate declines as base effect of Go To Travel Campaign dissipates
February 18, 2022
Summary
◆Japan’s January 2022 core CPI (excluding fresh foods) was at +0.2% y/y, falling below market consensus at +0.3%. While non-durable goods continued to bring upward pressure on CPI as a result of the influence of highs being experienced in import prices, services brought downward pressure on overall performance. Energy has been the main factor in recent core CPI growth, while prices of other components are marking time.
◆Looking at year-to-year performance by component in January 2022, energy related components and foods showed growth rates on the upswing due to import price highs. Meanwhile, in the area of services, “Hotel charges,” which had been reflecting the base effect of the Go To Travel Campaign through December of 2021, suffered a decline in growth rate.
◆As for the future of y/y change in Japan’s core CPI, positive and negative factors are expected to continue competing, but moderate growth is expected to continue overall, due to the influence of import price highs. However, the uncertainty factor of the Omicron variant of COVID-19 is expected to continue bringing influence on trends for the time being. If the macroeconomic supply-demand balance deteriorates due to the spread of infection, there will be lagging downward pressure on prices.
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