February 24, 2023
Summary
◆Japan’s January 2023 core CPI (excluding fresh foods) was at +4.2% y/y, recording its highest growth rate since September of 1981. Growth was up 0.2%pt in comparison to the previous month - here we must take into consideration the influence of the reduction in discount rates under the Nationwide Travel Support.
◆Japan’s CPI growth rate (excluding fresh foods and energy) is expected to turn downward in early 2023, and then rise moderately from the second half of 2024 to about +1% y/y in the Jan-Mar period of 2025. The underlying tone of prices is expected to continue to rise moderately, given the tightening of the macro supply-demand balance and higher wage growth.
◆One of the characteristics of the recent price hikes is that not only flexible price items, which are subject to frequent price revisions, but also sticky price items, which are subject to less frequent price revisions, have seen an increase in the rate of price hikes. Price trends for sticky price items are considered to be closely related to the expected inflation rate, and it is possible that the higher expected inflation rate is driving price increases for sticky price items.
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