Japan Inflation Rate Slows to 15-Month Low

Japan's consumer price inflation inched lower to 0.2 percent year-on-year in January 2019 from 0.3 percent in the previous month and in line with market expectations. It was the lowest inflation rate since October 2017, amid further decreases in prices of food, transport and housing.

Prices of food dropped by 1.5 percent year-on-year in January, after a 1.1 percent fall in December and marking the second straight month of declines. Among food, cost fell further for vegetables & seaweeds (-14.4 percent vs -12.7 percent), of which fresh vegetables (-21.2 percent vs -19.7 percent); fruits (-2.7 percent vs -0.3 percent), of which fresh fruits (-3.3 percent vs -0.7 percent); and oils, fats & seasonings (-0.6 percent vs -0.3 percent). In addition, prices slowed for cereals (0.7 percent vs 1.0 percent); and fish & seafood rose 1.5 percent (vs 1.8 percent), of which fresh fish & seafood (0.5 percent vs 0.6 percent), while was steady for cooked food (at 0.1 percent). Meantime, prices rose faster for: dairy products & eggs (2.8 percent vs 2.6 percent), meals outside the home (1.1 percent vs 1.0 percent) and meat (0.3 percent vs 0.1 percent).

Also, cost fell for furniture and household utensils (-0.1 percent vs 0.1 percent) and continued to decrease for housing (-0.1 percent, the same as in December). At the same time, cost of transportation & communication declined for the second consecutive month (-0.2 percent vs -0.1 percent). In contrast, inflation was steady for medical care (at 1.3 percent); and education (at 0.5 percent). Additionally, cost increased faster for culture & recreation (1.5 percent vs 0.9 percent); fuel, light & water charges (5.2 percent vs 5.0 percent), of which electricity (7.2 percent vs 6.4 percent) and gas (5.6 percent vs 4.8 percent); miscellaneous goods & services (0.9 percent vs 0.8 percent) and clothes & footwear (0.2 percent vs 0.1 percent).

Annual core consumer inflation, which excludes fresh food, went up to 0.8 percent in January from a seven-month low of 0.7 percent in December and matching market consensus. The figure came in well below the Bank of Japan's target of 2 percent.

On a monthly basis, consumer prices rose by 0.3 percent in January, following a 0.2 percent drop in December and reaching the first monthly increase in three months.

Japan Inflation Rate Slows to 15-Month Low

Statistics Japan l Rida Husna | rida@tradingeconomics.com
2/22/2019 9:22:40 AM