Japan Inflation Rate Slows to 14-Month Low

Japan's consumer price inflation eased to 0.3 percent year-on-year in December 2018 from 0.8 percent in the previous month, in line with market expectations. It was the lowest inflation rate since October 2017, mainly due to declines in cost of food, housing and transport. In 2018, the average inflation rate was 1 percent.

Prices of food declined by 1.1 percent from a year earlier in December, the first drop since November 2017, compared to a 0.5 percent rise a month earlier. Among food, cost fell for: vegetables & seaweeds (-12.7 percent vs -2.0 percent), of which fresh vegetables (-19.7 percent vs -4.5 percent); fruits (-0.3 percent vs 3.6 percent), of which fresh fruits (-0.7 percent vs 3.6 percent); and alcoholic beverages (-1.5 percent vs -1.1 percent). In addition, inflation slowed for: cooked food (0.1 percent vs 0.6 percent); cereals (1.0 percent vs 1.1 percent); dairy products & eggs (2.6 percent vs 2.8 percent); and meals outside the home (1.0 percent vs 1.1 percent). Meantime, prices of meat increased 0.1 percent, the same as in November; while those of fish & seafood rose 1.8 percent, faster than a 1.5 percent advance a month earlier, of which fresh fish & seafood (0.6 percent vs -0.2 percent).

Also, housing prices continued to decline (-0.1 percent, the same as in November) and cost of transportation & communication decreased 0.1 percent, the first fall since August 2017, compared to a 1.2 percent rise in November. At the same time, cost went up at a softer rate for culture & recreation (0.9 percent vs 1.0 percent), and miscellaneous goods & services (0.8 percent vs 0.9 percent); while inflation was unchanged for clothes & footwear (at 0.1 percent); education (at 0.5 percent); and fuel, light & water charges (at 5 percent), of which electricity (6.4 percent vs 5.6 percent), gas (4.8 percent vs 4 percent) and other fuel & light (12.2 percent vs 21.9 percent). Meanwhile, cost rose faster for medical care (1.3 percent vs 1.2 percent); and rebounded for furniture & household utensils (0.1 percent vs -0.7 percent).  

The country's annual core consumer inflation, which excludes fresh food, slowed to a seven-month low of 0.7 percent in December 2018 from 0.9 percent in the previous month, missing market expectations of 0.8 percent. The figure came in well below the Bank of Japan's 2 percent target ahead of next week's policy meeting, where the bank is seen cutting its price forecasts and warning of heightening global uncertainties.

On a monthly basis, consumer prices declined 0.2 percent in December, the same pace as in November.

Japan Inflation Rate Slows to 14-Month Low

Statistics Japan | Rida Husna | rida@tradingeconomics.com
1/18/2019 10:23:58 AM