Inflation in Japan slowed in August — The Japan Times
In Japan, annual consumer price growth excluding fresh food slowed to 1.7% in August from 1.8% in July. This was the first slowdown in inflation in four months, The Japan Times reports, citing data from Japan’s Ministry of Internal Affairs and Communications.
Impact of government subsidies
Economists had expected the inflation rate to remain at July’s level. The overall figure was affected by government measures aimed at reducing household expenses, primarily caps on gasoline prices. In August, these measures lowered the overall consumer price index by 0.62 percentage points.
The index excluding fresh food and energy, which the Bank of Japan tracks as an indicator of core inflation, rose by 1.9% year on year. The overall consumer price index increased by the same amount.
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Pressure on companies’ costs
At the same time, other price indicators point to mounting pressure on Japanese businesses. Corporate goods prices rose by 7.6% in August compared with the same month a year earlier, exceeding expectations. The publication cites high energy prices, a weak yen and a tight labor market among the factors.
According to Teikoku Databank, the number of food and beverage products whose prices were raised in September was 83% higher than a year earlier. The pace of price growth for processed foods slowed to 2.7% from 3% in July. At the same time, price increases accelerated for durable household goods, education and leisure goods, as well as medical services. Accommodation costs fell by 1.4% in August, while rice prices dropped by 15.7% after a sharp increase a year earlier.
Rate expectations
The statistics were released several hours before the Bank of Japan’s monetary policy decision. Surveyed economists unanimously forecast a 0.25-percentage-point rate increase, to 1.25%. In its latest forecast, the central bank expected inflation to accelerate to a level clearly above 2% in the second half of the current fiscal year.
