Japan CPI Preview: Forecasts from four major banks, inflation cooling due to base effect

Japan is set to release February Consumer Price Index data on Thursday, March 23 at 23:30 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of four major banks regarding the upcoming Japanese inflation data. 

Headline is expected at 3.3% year-on-year vs. 4.3% in January, core (ex-fresh food) is expected at 3.1% YoY vs. 4.2% in January, and core ex-energy is expected at 3.4% YoY vs. 3.2% in January.

Standard Chartered

“We expect headline CPI inflation to have expanded to 3.3% YoY, down from 4.3% in January. Similarly, core CPI inflation excluding fresh food may also have increased to 3.2%, less than 4.2% prior. However, core CPI excluding food and energy likely grew by 3.4% YoY in February, higher than 3.2% prior. The moderation in headline and core CPI inflation is mainly due to the base effect of oil prices, in our view. Tokyo CPI inflation, which is a leading indicator of national CPI inflation, increased to 3.4%, down from 4.4% in January. Tokyo core CPI inflation also dropped to 3.3% from 4.4% prior. However, core Tokyo CPI inflation rose to 3.2% from 3.0% prior, indicating that CPI inflation is sticky and headline CPI may take time to fall below the Bank of Japan's 2% target level.”

ING

“Consumer inflation in Japan is expected to cool to 3.5% YoY in February (vs 4.3% in January) due to the government’s energy subsidy programme, helped along by the base effects of a slowdown.”

SocGen

“We forecast nationwide core CPI of 3.2% YoY in February, significantly down from the 4.2% YoY seen in January. However, there is considerable uncertainty about the future.” 

CitiBank

“Citi Forecast: 3.1% YoY, Previous: 4.3% YoY; Excluding Fresh Food: Citi Forecast: 3.0% YoY, Previous: 4.2% YoY; Excluding Fresh Food and Energy: Citi Forecast: 3.4% YoY, Previous: 3.2% YoY. We expect nationwide core CPI measures to rise from the previous month but fall sub 2% YoY from early autumn as the impact of past rises of commodity prices and Yen depreciation diminishes.”