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24 Dec 2014
All-Japan inflation continues slide – Nomura
FXStreet (Barcelona) - Research Analysts at Nomura forecast the Japanese CPI for November to fall, noting that worsening output gap and falling crude oil price are major reasons behind the continued fall in Japan’s inflation.
Key Quotes
“All-Japan core CPI inflation (excluding the effect of the consumption tax increase) fell to +0.9% y-y in October owing to the effect of lower crude oil prices and deterioration in the output gap on the back of weak consumer spending in the wake of the consumption tax hike.”
“Our forecast for November all-Japan core CPI inflation is +2.7%, or +0.7% after stripping out the impact of the consumption tax hike, down 0.2ppt from October. We look for the corresponding all-Japan core figures to come in at +2.0% and +0.3%, respectively, both down 0.2ppt from October.”
“The November core CPI for Tokyo, which has already been published, shows a decline in the inflation rate for a broad range of durables, including televisions, refrigerators, and clothing and we expect this trend to hold true for the all-Japan index as well. Hotel charges are used by both the all-Japan and Tokyoarea inflation indicators, and we estimate this depressed all-Japan core inflation by 0.05% in November.”
“We expect December Tokyo core CPI inflation of 2.4% y-o-y and 0.5% excluding the impact of the consumption tax hike, both flat from November. We look for the corresponding Tokyo core figures to come in at +1.8% and +0.3%, with both also on a par with November.”
“In December, we think the contribution to core inflation from energy prices will again be muted in view of low crude oil prices. In the Tokyo area, however, we expect the impact of falling energy prices on core inflation to ease as energy prices fell in December 2013.”
Key Quotes
“All-Japan core CPI inflation (excluding the effect of the consumption tax increase) fell to +0.9% y-y in October owing to the effect of lower crude oil prices and deterioration in the output gap on the back of weak consumer spending in the wake of the consumption tax hike.”
“Our forecast for November all-Japan core CPI inflation is +2.7%, or +0.7% after stripping out the impact of the consumption tax hike, down 0.2ppt from October. We look for the corresponding all-Japan core figures to come in at +2.0% and +0.3%, respectively, both down 0.2ppt from October.”
“The November core CPI for Tokyo, which has already been published, shows a decline in the inflation rate for a broad range of durables, including televisions, refrigerators, and clothing and we expect this trend to hold true for the all-Japan index as well. Hotel charges are used by both the all-Japan and Tokyoarea inflation indicators, and we estimate this depressed all-Japan core inflation by 0.05% in November.”
“We expect December Tokyo core CPI inflation of 2.4% y-o-y and 0.5% excluding the impact of the consumption tax hike, both flat from November. We look for the corresponding Tokyo core figures to come in at +1.8% and +0.3%, with both also on a par with November.”
“In December, we think the contribution to core inflation from energy prices will again be muted in view of low crude oil prices. In the Tokyo area, however, we expect the impact of falling energy prices on core inflation to ease as energy prices fell in December 2013.”