October 2024 Consumer Price Index

New core-core CPI y/y growth rate grows in comparison to previous month due partly to special factors

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November 25, 2024

  • Kanako Nakamura
  • Shotaro Kugo

Summary

◆Japan’s October 2024 core CPI (excluding fresh food) recorded +2.3% y/y, a decline in the y/y growth rate in comparison to the previous month. On the other hand, new core-core CPI (excluding fresh food and energy) grew by +2.3% y/y, an increase in the y/y growth rate in comparison to the previous month. Special factors such as the sharp increase in the price of rice and an increase in the growth rate for public services were especially influential.

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

◆As for the future of Japan’s new core-core CPI, growth of around +2.0% y/y is expected in both FY2024 and FY2025. The main cause of rising prices has already shifted from an increase in intermediate input costs to an increase in labor costs. The structural issue of an intensifying labor shortage is expected to continue to drive companies to raise wages. This will also lead to a continuation of the trend of passing on the resulting increase in labor costs to sales prices. 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% y/y.

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