Econintersect: The inflation readings have been released for Japan for July. The CPI (Consumer Price Index) recorded a gain of 0.7% over the level for August 2012. This was the highest reading since late 2008. However, energy and energy dependent factors provided all of the gain; the core CPI, excluding food and energy, was -0.1%. This indicates contraction but was one of the smallest contractions in quite some time.
The July core CPI approaching zero may not follow through in August, however. The preliminary core CPI for August is -0.4% year-over-year, based on data from the Ku-area of Tokyo which has proven to be a good forward indicator for the entire country.
The following table was provided by the Japan Statistics Bureau:
Japan is struggling to end decades of deflation and move toward the governments inflation rate target of 2%. It would seem that some of the conditions are in place to produce positive inflation. Industrial production is expanding (up 1.6% on a year-over-year basis and up 3.2% over July) and employment is tight (3.8% unemployment).
Sources:
- Japan Statistics Bureau Report (Ministry of Internal Affairs and Communications, 30 August 2013)
- Japan inflation rises to highest in nearly five years (Ben McLannahan, Financial Times, 30 August 2013)
