JPY: All-Japan Core Inflation Rate Lower than Consensus – Nomura
Research Team at Nomura, notes that in March the all-Japan core CPI
(general index excluding fresh food) fell 0.3% y-y, below the consensus
of -0.2% (Bloomberg survey median) and down from 0.0% in February.
“This marked the first time in five months the all-Japan core CPI was negative. Energy price inflation in March was -13.3% y-y, a steeper decline than February's -10.9% and weighing heavily on the core CPI. The core core CPI in March also slowed, to +0.7% y-y from +0.8% in February (consensus forecast of +0.8%).
Consumer durables price inflation continued to slow, an indication that upward pressure on prices from yen depreciation has been fading. However, the core food CPI (excluding fresh food and alcoholic beverages) inflation rate in March was +2.3%, level with February. Estimates for the Bank of Japan's core core CPI (excluding fresh food and energy) put inflation based on this measure at +1.1% in March, unchanged for the third consecutive month.
Underlying inflation trend remains subdued: We conclude that the underlying inflation trend remains subdued. In particular, we think the ebbing impact of yen depreciation is affecting consumer durable and core food inflation and that inflation rates as measured by the core CPI and the BOJ’s core CPI will most likely slow gradually going forward. Regarding core CPI inflation, however, the price of crude oil is somewhat higher than we had assumed. It is looking increasingly likely that the all-Japan core CPI will trend around 0% y-y in 2016.”