July 2023 Consumer Price Index

◆Japan’s July 2023 core CPI (excluding fresh food) recorded +3.1% y/y. New core-core CPI (excluding fresh food and energy) was at +4.3%, growth of 0.1% pt in comparison to the previous month. The seasonally adjusted figure for new core-core CPI (seasonally adjusted by Laspeyres' Chain Index Method), was at +0.6% m/m. Although special factors were partly responsible for pushing prices up, mainly the end of Nationwide Travel Support in some regions, the growth trend in prices remains strong.

◆Looking at the y/y change in core CPI in terms of goods and services, in energy, the negative range of electricity and city gas bills widened in comparison to the previous month. The positive range narrowed for durable and semi-durable goods. On the other hand, non-durable goods (excluding fresh food and energy) and services expanded their positive growth.

◆As for the future of Japan’s core CPI (excluding fresh food) in y/y terms, the positive range is expected to gradually narrow, but even so, growth is expected to exceed 2% for some time to come. 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, is growing 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.