November2023ConsumerPriceIndex

◆Japan’s November 2023 core CPI (excluding fresh food) recorded +2.5% y/y. New core-core CPI (excluding fresh food and energy) was at +3.8%. New core-core CPI fell below 4% for the first time since March. Growth in prices on a y/y basis is clearly slowing down.

◆Looking at the y/y change in core CPI in terms of goods and services, the positive range shrunk for durable consumer goods, semi-durables, and non-durables (excluding fresh food and energy), and energy experienced a decline in negative range. On the other hand, services saw an increase in the positive range of growth. Public services experienced a decline in the range of negative growth on a y/y basis, while general services increased their positive range, which boosted the entire services category.

◆As for the future of Japan’s core CPI, growth of +2.8% y/y is expected in FY2023, with the same rate of growth (+2.8%) also seen in FY2024. As for new core-core CPI, +3.9% is seen in FY2023 and +1.9% in FY2024. With further progress in price pass-through, and a slightly higher wage increase compared to the previous year expected in spring wage negotiations in 2024, the cyclical growth mechanism of wages and prices is expected to function reliably. We expect the Bank of Japan to achieve its 2% price stability target.