April 19, 2024
Summary
◆Japan’s March 2024 core CPI (excluding fresh food) recorded +2.6% y/y. New core-core CPI (excluding fresh food and energy) was at +2.9%. Both core CPI and new core-core CPI show a reduction in y/y growth rate in comparison to the previous month, with y/y growth in prices continuing to slow down gradually.
◆Looking at the y/y change in core CPI in terms of goods and services in March 2024, the growth rate declined in comparison with the previous month for durable consumer goods, semi-durables, and non-durables (excluding fresh food and energy), as well as services. On the other hand, the growth rate of energy saw the extent of its decline reduced in comparison to the previous month.
◆As for the future of Japan’s new core-core CPI (excluding fresh food and energy), growth of +2.1% y/y is expected in FY2024, with +2.0% seen in FY2025. The risk of the underlying inflation rate being on the high side is especially large in FY2024. As for this year’s spring labor negotiations, the Japanese Trade Union Confederation announced the fourth aggregated result of companies' responses on April 18. The rate of wage increase, including regular salary increase, is a weighted average of 5.20%. We expect the cyclical growth of wages and prices to strengthen centering on FY2024 as companies move to implement price pass-through in response to the increased labor costs resulting from higher wages.
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