Japan Inflation Overview

JAPAN CPI

Japan Headline and Core CPI for Sept both came in lower than expected.

Japan Headline CPI:

• YoY – Actual 3.0% / Exp. 3.2% / Prev. 3.2% (green on chart)
  
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Japan Core CPI:

• YoY – Actual 4.2% / Exp. 4.3% / Prev. 4.3% (blue on chart)
  
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The chart below illustrates that Core CPI appears to be plateauing with Headline CPI decreasing from 4.3% to 3% since Jan 2023. Similar to the Eurozone chart you can we are long way from the moderate levels of inflation between -1.5 – 1.5% from 2015 – 2020 below.

Japan’s economy contracted by 2.1 per cent during the third quarter of 2023, following an expansion in the previous two quarters. Analysts fear the country might slip into a recession. The contraction was sparked by a combination of sticky core inflation holding close to its 4.2 – 4.3% ceiling since May 2023, the slowing of exports, and low pay rises that appear to have led to weak domestic consumption.

“Given the absence of a growth engine it wouldn’t surprise me if the Japanese economy contracted again in the current quarter. The risk of Japan falling into recession cannot be ruled out.” - Takeshi Minami – Chief Economist Norinchuckin Research Institute