Japan's consumer price inflation fell to 0.3 percent year-on-year in August 2019 from 0.5 percent in the previous month and well below market expectations of 0.6 percent. It was the lowest inflation rate in six months, raising the chances of further stimulus after the Bank of Japan decided to leave policy unchanged in its September meeting but left the window wide open for easing, calling for a review of prices and the economy in October.
Food prices edged up 0.1 percent in August, slowing from a 0.9 percent gain in the previous month, as fresh food prices fell at a faster pace (-4.9 percent vs -0.7 percent). Other price declines were seen for fish & seafood (-0.5 percent vs 1.5 percent) and vegetables & seaweeds (-6.4 percent vs -1.9 percent). Meanwhile, upward pressure came from: cereals (1 percent vs 1.2 percent); meats (1.3 percent, the same as in July); cakes & candies (3.0 percent vs 2.8 percent); cooked food (0.6 percent vs 0.8 percent); and meals outside the home (0.9 percent, the same as in July).
9/20/2019 9:30:42 AM
Inflation was unchanged for housing (at 0.2 percent), culture & recreation (at 1.1 percent) and miscellaneous (at 1.0 percent), while prices dropped for transportation & communication (-1.2 percent, the same as in July) and medical care (-0.2 percent vs 0.6 percent). In contrast, prices rose faster for furniture & household utensils (2.3 percent vs 1.7 percent); clothes & footwear (0.6 percent vs 0.4 percent).
Annual core consumer inflation, which excludes fresh food, was at 0.5 percent in August, down from 0.6 percent in the previous month and in line with market expectations. The latest reading remained well below the Bank of Japan's 2 percent target and was at over a 2-year low. Stripping away the effect of fresh food and energy, consumer prices rose 0.6 percent in August, the same pace as in the previous month and slightly above expectations of 0.5 percent.
On a seasonally adjusted monthly basis, consumer prices were unchanged in August, following a 0.1 percent increase in the previous month. The core CPI was up 0.1 percent.