Japan: Core CPI inflation for August to come in at -0.5% y-y - Nomura

Research Team at Nomura, forecasts the all-Japan core CPI inflation for August to come in at -0.5% y-y, unchanged from July.

Key Quotes

“We expect core CPI inflation (CPI ex energy and food (ex-alcohol)) to contribute to slower core CPI inflation and energy to contribute to an acceleration, with these contributions more or less cancelling each other out. We forecast the all-Japan core CPI to come in at +0.2%, down from +0.3% in July. The core CPI inflation print for the Tokyo area for August was +0.1%, a slowdown from +0.2% in July, and we expect the all-Japan data to broadly follow this pattern. As for the energy category, electricity and gas prices are bottoming, and the rate of decline is likely to narrow as a result, in our view.

Looking to September, we forecast the Tokyo area core CPI will come in at -0.3% y-y, versus -0.4% in August. We expect a further narrowing in the rate of decline for energy to boost the core CPI figure. Meanwhile, we forecast the core CPI for the Tokyo area in September will come in at +0.1% y-y, the same as in August. Downward pressure on prices from yen appreciation is likely to continue as an underlying trend. However, with core core CPI for Tokyo registering a rapid slowdown recently we will be watching for any correction in September.”