|

Japan: Food and services signal steady inflation – Societe Generale

Societe Generale economists Reo Sakida and Jin Kenzaki analyze June Tokyo Consumer Price Index (CPI), noting that overall inflation dynamics in Japan changed little from May despite a modest upside surprise in headline and core readings. They highlight that non-fresh food is on a disinflationary path but likely near a bottom, while service inflation remains firm and Tankan survey expectations will be crucial into 2H.

Tokyo CPI shows steady inflation signals

"Overall: Inflation dynamics changed little from the previous month. The increase from previous month largely reflects the fading impact of Tokyo’s water fee waiver program and therefore does not signal broader nationwide inflation pressure. Non-fresh food remains on a disinflationary path, although the trough appears close."

"Into 2H, negative base effects begin to fade, adding some upward pressure."

"Food: Food prices continue to decline, but survey data suggest inflationary pressures are building for the late summer months. As negative base effects gradually fade into 2H, food inflation appears close to bottoming."

"In addition, the latest June survey from Teikoku Databank shows an upward shift in planned food price revisions. Higher energy costs have yet to fully feed through to consumer prices, but that is likely to change in late summer as producers begin passing those costs on."

"Nevertheless, service inflation should remain firm, supported by solid fundamentals. Strong wage negotiation results continue to support wage growth, while service consumption has remained resilient."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.