September 2024 Consumer Price Index

◆Japan’s September 2024 core CPI (excluding fresh food) recorded +2.4% y/y, a decline in growth rate in comparison to the previous month. This was mainly due to the implementation of government measures to combat high energy prices. New core-core CPI (excluding fresh food and energy) recorded +2.1% y/y, an increase in growth rate in comparison to the previous month.

◆Looking at the y/y change in core CPI in terms of goods and services in September 2024, the growth rates for energy and services declined in comparison to the previous month. On the other hand, rates for semi-durables and non-durables (excluding fresh food and energy) increased in comparison to the previous month. The growth rate for durables marked time in comparison to the previous month.

◆As for the future of Japan’s new core-core CPI, growth of +2.0% y/y is expected in both FY2024 and FY2025. While the pace of increase in intermediate input costs is expected to be slower particularly from the mid-point of FY2024, the momentum for companies to pass on increases in labor costs to selling prices in response to significant wage hikes during the spring labor negotiations will expand more than in FY2023. There will likely be an increase in underlying inflation rate from the second half of FY2024. We expect the cyclical increase in wages and prices to become the norm in FY2025, with new core-core CPI maintaining stable growth of around +2%.