Japan Inflation Rate Slows to 0.7% in May


Japan's consumer price inflation fell to 0.7 percent year-on-year in May 2019 from a six month-high of 0.9 percent in the prior month and in line with market consensus. The slowdown in headline inflation was mainly led by electricity, transportation & communication and housing. Meanwhile, prices of food rose for the second straight month.

Cost advanced at a softer rate for fuel, light & water charges (3.2 percent vs 4.4 percent in April), namely electricity (3.6 percent vs 5.8 percent), and gas (4.8 percent vs 5.5 percent); culture & recreation (1.3 percent vs 2 percent); miscellaneous goods & services (1 percent vs 1.1 percent); and medical care (0.7 percent vs 0.9 percent). At the same time, clothes & footwear prices were flat (vs 0.1 percent in April). In addition, housing inflation was unchanged (at 0.1 percent) and cost of transportation & communication fell the most in three months (-0.4 percent vs -0.2 percent). 

Meanwhile, prices of food rose by 0.8 percent year-on-year in May, after a 0.7 percent gain in April. This was the second straight month of food inflation and the highest figure since October last year. Among food, cost of both cereals (1.1 percent vs 0.8 percent in April); and dairy products & eggs increased faster (1.9 percent vs 1.5 percent), with prices of vegetables & seaweeds rebounding (0.2 percent vs -0.1 percent), in particular fresh vegetables (flat reading vs -0.6 percent); while inflation was steady for both fish & seafood (at 1.6 percent), mostly fresh fish & seafood (0.9 percent vs 0.4 percent); and meals outside the home (at 1 percent). In addition, cost of fresh food fell less (-0.1 percent vs -0.3 percent). Meantime, inflation slowed for both meat (0.9 percent vs 1 percent); and cooked food (0.9 percent vs 1 percent); while prices of oils, fats & seasonings were flat (vs 0.2 percent in April). 

Also, prices went up faster for both furniture and household utensils prices (2.6 percent vs 1.6 percent); and education (0.6 percent vs 0.5 percent). 

Annual core consumer inflation, which excludes fresh food, edged down to 0.8 percent in May from 0.9 percent in April and matching expectations. The latest figure remained well below the Bank of Japan's 2 percent target. Meantime, stripping away the effect of fresh food and energy, consumer prices rose by 0.5 percent year-on-year in May, following a 0.6 percent gain in a month earlier and slightly below estimates of a 0.6 percent rise.

On a seasonally adjusted monthly basis, consumer prices were unchanged in May, after a 0.1 percent gain in April.


Japan Inflation Rate Slows to 0.7% in May


Statistics Japan l Rida Husna | rida@tradingeconomics.com
6/21/2019 10:24:03 AM