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Economy in Brief

Japan’s Inflation Rate Rises but ‘Core’ Still Below Zero Y/Y 
by Robert Brusca March 28, 2008

Japan has been gradually making progress toward ridding itself of its chronic deflation. Headline inflation now has turned positive year-over-year and is positive over three months as well as over the six-month horizon. The 12-month calculations are markedly different from the year ago calculations which refer to the previous 12-month period when the economy was more firmly in the grip of deflation. Still, core inflation (ex-food and energy) has not yet moved up above the zero mark.>

In the quarter to date, inflation also has a positive tone. Headline inflation is up at a 1% pace while the core is up at a 0.4% pace and ex-food prices are rising at a 2.3% rate. Most CPI components are rising in the first quarter of 2008 as well.

For Japan this mild inflation is a mark of success while other countries are suffering with true inflation risks. Japan is emerging from its battle with deflation, but it is still fighting to secure growth.

Japan CPI Trends
  Feb-08 Jan-08 Dec-07 3-mo 6-mo 12-mo Yr-Ago Qtr-to-Date
All items 0.1% 0.0% 0.1% 0.8% 1.2% 1.0% -0.8% 1.0%
All items less food and energy -0.1% 0.1% -0.1% -0.4% 0.2% -0.1% -1.2% 0.4%
All items except fresh food 0.1% 0.1% 0.4% 2.4% 1.8% 1.0% -0.4% 2.3%
seasonally adjusted BY Haver
Food & Beverage 0.2% -0.2% 0.1% 0.4% 0.0% 1.2% 0.4% -0.5%
Housing 0.0% 0.0% 0.1% 0.4% 0.2% 0.0% -1.2% 0.3%
Clothing and Personal  -0.2% 0.2% 0.0% 0.0% -0.2% 0.7% 1.6% 0.8%
Education 0.1% 0.1% 0.0% 0.8% 0.8% 0.7% 3.2% 0.9%
Medical care -0.1% 0.1% 0.0% 0.0% -0.8% 0.1% -1.2% 0.2%
Miscellaneous -0.1% 0.1% 0.0% 0.0% 0.4% 0.5% 4.5% 0.1%
Reading & Recreation -0.3% 0.1% -0.3% -2.0% -0.8% -0.9% -4.4% -1.2%
Transport & Communication -0.1% 0.2% 1.0% 4.4% 5.0% 3.1% -1.6% 5.7%
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