JPY: Inflationary pressure eases – Commerzbank

No new inflation data was released in Japan this week. However, two surveys were published, the Tankan and the consumer confidence survey, which also asked about inflation expectations (and the development of sales prices). These indicate that inflationary pressure is likely to ease further in the coming months, Commerzbank's FX analyst Volkmar Baur notes.

Japan surveys hint at cooling inflation

"Consumer inflation expectations fell for the second month in a row, reaching their lowest level since the end of last year. At 3.6%, the weighted average of expectations calculated by us is still quite high, but a look at the historical data shows that consumers usually overestimate the level of inflation. We should therefore be less concerned about the level than about the direction in which it is moving. From this perspective, the falling expectations can certainly be viewed as positive."

"The same applies to the Tankan survey of large manufacturing companies. Here, too, lower sales prices are reported. In fact, a clear difference between the sales prices in the survey and inflation has emerged over the past few months. This could be due, among other things, to the fact that food prices have been the main driver of inflation in Japan recently. Nevertheless, the survey points to a weakening of inflationary pressure in the manufacturing sector and is a further indication that the central bank will take its time before raising interest rates again."