June 2023 Consumer Price Index

◆Japan’s June 2023 core CPI (excluding fresh food) recorded +3.3% y/y. New core-core CPI (excluding fresh food and energy) was at +4.2%, a decline of 0.1% pt in comparison to the previous month. This is the first time in 1 year and 5 months that new core-core CPI has experienced a decline on a y/y basis in comparison to the previous month. Hence it is believed that new core-core CPI appears to be showing signs of peaking out. The seasonally adjusted figure for new core-core CPI (seasonally adjusted by Laspeyres' Chain Index Method), was at +0.2% m/m. In annualized terms this is around +2.3%, meaning that it is maintaining a pace of growth above the BOJ price stability target of 2%. But the rapid acceleration in the pace of increase seen in late 2022 and early 2023 has already run its course.

◆The y/y change in core CPI (excluding fresh food) is expected to exceed 2% for the time being, although the positive range will gradually narrow. With the high rate of growth in wages achieved in the 2023 spring labor negotiations, the upward trend in the price of services, which is closely linked to wages, will likely grow stronger. Companies are now becoming more aggressive in their pricing behavior, and there is a possibility that they will further accelerate their efforts to pass on the increased input costs resulting from higher wages to selling prices.