Global| Jun 25 2004Consumer Prices Still Weak in Japan
Summary
Analysts had projected that Japan's core CPI for Tokyo would finally stop falling in June. But it did not. It was down, just a little, but still down by 0.1% from a year ago. On the heels of this report, which also included widespread [...]
Analysts had projected that Japan's core CPI for Tokyo would finally stop falling in June. But it did not. It was down, just a little, but still down by 0.1% from a year ago. On the heels of this report, which also included widespread deflation in the national CPI for May, the monetary policy committee of the Bank of Japan voted unanimously to maintain their zero-interest rate policy. It had been thought that some subtle move away from the potentially limitless provision of liquidity that accompanies that rate target might have been forthcoming if the CPI finally stabilized. Such was not the case. And unlike most of the other major economies of the world, Japan is not yet facing a sudden new burden of inflationary pressure.
The deflation in Japan does seem to be dissipating. Clothing prices, for instance, rose sharply in Tokyo and several sectors are experiencing much less downward price pressure than they have been. Press reports indicated that some of the softness in the Tokyo numbers reflected sales promotions in electronics, ahead of the introduction of new models. This could well be just a transitory force, then, with recently firmer demand possibly allowing net price gains to show through "soon".
The last year-on-year rise in the national "general CPI" was in August 1999. In the headline series, the core rate in the Tokyo area, the last such increase was in August 1998. In the Japanese array of CPI data, the core is defined as the general CPI less fresh food.
| % Changes | June 2004 | May 2004 | Apr 2004 | 2003 | 2002 | 2001 |
|---|---|---|---|---|---|---|
| General CPI, SA, mo/mo | N.A. | -0.2 | -0.3 | |||
| NSA, yr/yr | N.A. | -0.5 | -0.4 | -0.4 | -0.3 | -1.2 |
| Core CPI, SA, mo/mo | N.A. | -0.2 | -0.1 | |||
| NSA, yr/yr | N.A. | -0.3 | -0.2 | 0.0 | -0.7 | -0.9 |
| Tokyo CPI, SA, mo/mo | +0.2 | -0.1 | -0.1 | |||
| NSA, yr/yr | -0.1 | -0.3 | -0.3 | -0.4 | -0.3 | -1.5 |
| Tokyo Core CPI, SA, mo/mo | -0.1 | 0.0 | -0.1 | |||
| NSA, yr/yr | -0.1 | -0.1 | -0.1 | -0.1 | -0.7 | -1.0 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
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