Economic Indicators

Japan CPI eases as expected in April, raises more doubts over BOJ tightening— Japan consumer price index (CPI) inflation eased as expected in April as private spending remained squarely on the backfoot, raising more doubts over the Bank of Japan’s forecast of higher inflation and its capacity to raise interest rates. 

Core CPI— which excludes volatile fresh food prices- rose 2.2% year-on-year in April, data from the Statistics Bureau showed on Friday. The reading was in line with expectations and eased from the 2.6% seen in the prior month.

A core CPI reading that excludes both fresh food and food prices, and which is used as a key gauge of underlying inflation by the BOJ, sank to 2.4% in April, compared to a 2.9% reading in March. The reading was at its weakest level since September 2022, and was far below a 40-year peak hit in mid-2023. 

Headline CPI inflation rose 2.5% from 2.7% in the previous month. 

The reading comes on the heels of dismal first-quarter gross domestic product data, which showed the Japanese economy shrank much more than expected as private consumption stalled. 

This trend appeared to have spilled over into the beginning of the second quarter, as seen with Friday’s soft CPI figures. 

The soft CPI reading raised doubts over the BOJ’s forecast of higher inflation in the coming months, and also brought up questions over just how much headroom the central bank has to keep raising interest rates this year.

Consumer spending is expected to be boosted by higher wages, especially after several major labor unions won bumper wage hikes for 2024. But this is yet to be reflected in the monthly data. 



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