February 2022 Consumer Price Index

◆Japan’s February 2022 core CPI (excluding fresh foods) was at +0.6% y/y, exceeding market consensus at +0.5%. Non-durable consumer goods continued to bring upward pressure on CPI with the influence of highs in import prices. Energy was the main factor in core CPI growth, while prices of other components such as foods (excluding fresh foods) also experienced growth in prices. Though its appearance has been slower than in other countries, Japan can now be said to be experiencing the gradual advance of cost push inflation.

◆Looking at year-to-year performance by component in February 2022, energy related components such as “Electricity” and “Gas”, as well as some foods such as “White bread”, showed growth rates on the upswing. Meanwhile, in the area of services, “Hotel charges” grew, while the y/y decline in “Telephone charges (mobile phone)” remained unchanged from the previous month, while the overall decline in services as a whole narrowed.

◆The growth rate in Japan’s core CPI is expected to grow sharply due to the influence of cuts in mobile phone rates in April 2022, and is expected to continue moderate growth after that point due to highs in the price of imported goods. Upside risk in CPI has increased due to pressure from import prices due to a further surge in the price of crude oil and other resources as a result of tensions associated with the Ukraine situation and other factors.