Japan Inflation Rate Slows to 4-Month Low in July

Japan's consumer price inflation fell to 0.5 percent year-on-year in July 2019 from 0.7 percent in the previous month and in line with market expectations. This was the lowest inflation rate since March, amid a slowdown in food prices and a further fall in cost of transport and communication.

Prices of food rose by 0.9 percent in July, easing from a 1.4 percent increase in a month earlier. Within food, cost increased less for cereals (1.2 percent vs 1.3 percent in June); fish & seafood (1.5 percent vs 2 percent), of which  fresh fish & seafood (0.2 percent vs 1.2 percent); meat (1.3 percent vs 1.4 percent); cooked food (0.8 percent vs 1.1 percent); and meals outside the home (0.9 percent vs 1 percent). Also, prices of fresh food fell noticeably (-0.7 percent vs 2.8 percent); and cost of vegetables & seaweeds declined for the first time in three months (-1.9 percent vs 0.9 percent), in particular fresh vegetables (-3.3 percent vs 1 percent). By contrast, inflation was steady for oils, fats & seasonings (at 0.3 percent), while prices rose at a faster pace for dairy products & eggs (2.2 percent vs 2 percent).

Additionally, cost eased for fuel, light & water charges (2 percent vs 2.2 percent in June), namely gas (3 percent vs 3.9 percent), water & sewerage charges (0.2 percent vs 0.3 percent) and other fuel & light (-1.1 percent vs 0.3 percent); furniture and household utensils (1.7 percent vs 1.8 percent); and culture & recreation (1.1 percent vs 1.5 percent). Also, transportation & communication prices dropped for the eighth straight month (-1.2 percent vs -1.3 percent). On the other hand, inflation was unchanged for medical care (at 0.6 percent); while cost advanced slightly faster for housing (0.2 percent vs 0.1 percent); miscellaneous goods & services (1 percent vs 0.9 percent) and education (0.7 percent vs 0.6 percent). In addition, cost of clothes & footwear advanced 0.4 percent, after being flat in the prior month.

Annual core consumer inflation, which excludes fresh food, was at 0.6 percent in July, unchanged from June's 2-year low and also matching estimates. The latest reading remained well below the Bank of Japan's 2 percent target. Meanwhile, stripping away the effect of fresh food and energy, consumer prices rose by 0.6 percent year-on-year in July, following a 0.5 percent gain in June.

On a seasonally adjusted monthly basis, consumer prices rose by 0.1 percent in July, following a flat reading in the previous two months.

Japan Inflation Rate Slows to 4-Month Low in July

Statistics Japan l Rida Husna | rida@tradingeconomics.com
8/23/2019 8:37:23 AM