Japan Macro Updates

The One Stop Portal for Japan Macroeconomic Data. Simplified and Summarized!

We simplify and summarize key data so that you don’t have to spend hours reading confusing and long media releases. Read key economic releases and major events here in under 2 minutes. And we will explain the key takeaway for you. Stay informed and form a robust view on macroeconomic matters to aid your successful investment decisions

30th May 2024

Tokyo CPI

Key takeaway: The latest release from the Statistics Bureau of Japan showed Tokyo area CPI a slight increase in May with a reading of 1.9% y-o-y compared to 1.6% the previous month. In general, inflation in Japan peaked in early 2023 and has since been on a downward trend. However, more importantly, the inflation rate in Japan has been above the 2% BoJ target for more than 2 years. The annual labour wage negotiations at the start of 2024, also called “Shunto” have been successful in negotiating some of the larges wage hikes in decades. That is expected to spur consumption and keep the inflation rate at or above the 2% level. However, inflation has been trending sideways for the past 4-5 months without clear indications whether the resurgence of healthy inflation in Japan is sustainable or not. Tokyo inflation leads the national print by a couple of weeks and hence is tracked closely. The latest print, even though it shows an increase, continues to hide some softness underneath. The rise in Core CPI was mostly attributable to the phasing out of some energy subsidies and an increase in renewable energy levy on electricity charges. The Core CPI ex energy slowed to 1.7% y-o-y compared to an estimate of 1.8%. The underlying softness in inflation data continues to create doubts regarding future rate hikes from the BoJ. Economic data in Japan has been mixed in general. 

  • Tokyo Core CPI increased 0.3% m-o-m and increased 1.9% y-o-y (expected +1.9%)

26th Apr 2024

Key takeaway: The latest release from the Statistics Bureau of Japan showed Tokyo area CPI decelerated significantly in April with a reading of 1.6% y-o-y compared to 2.4% the previous month. Tokyo inflation had increased sharply in February after having fallen sharply in January and then fallen slightly in March. The large decrease in April though is significantly attributable to an education subsidy. The Tokyo metropolitan government made high school tuition free for all income groups and began providing subsidies to households with children attending private secondary schools. The sharp plunge for education costs is said to have shaved 0.5% from the overall CPI number. Hence, even though Tokyo inflation data is said to be leading indicator of national inflation, next month’s national inflation release is not expected to show the same quantum of drop. The BoJ still seems to be straddling a middle line with messaging that they will be data dependent. If inflation increases further and there are incremental signs of inflation being firmly entrenched, it will continue with additional rate hikes and vice versa. The BoJ already made its first move in increasing interest rates and normalising monetary policy. With wages on the rise, the likelihood of sticker inflation in Japan is progressively getting higher, putting more rate hikes on the horizon. Another key point to note is that energy subsidies put in place over the past few years will progressively roll off. That will also put some upward pressure on headline inflation. Headline CPI increased 1.8% compared to 2.6% in March. Finally, CPI ex food and energy – which is often called “Core-Core CPI” fell from 2.9% in March to 1.4% in April.

  • Tokyo Core CPI decreased 0.1% m-o-m and increased 1.6% y-o-y (expected +2.2%)

29th Mar 2024

Key takeaway: The latest release from the Statistics Bureau of Japan showed Tokyo area CPI decelerated slightly in March with a reading of 2.4% y-o-y compared to 2.5% the previous month. Tokyo inflation had increased sharply in February after having fallen sharply in January. Even though it fell slightly in March, the key point to note is that it remains above the 2% target level of the BoJ. Equally important to note that this was in line with consensus expectations. There are 2 key points to understand. First, Tokyo CPI data is released ahead of the National CPI number. Second, it  is generally thought of to be adequately reflective of inflation in Japan. Hence it serves as bit of a leading indicator. Since the last Tokyo area inflation report, we have already seen the BoJ make its first move in increasing interest rates and normalising monetary policy. With wages on the rise, the likelihood of sticker inflation in Japan is progressively getting higher, putting more rate hikes on the horizon. Another key point to note is that energy subsidies put in place over the past few years will progressively roll off. That will also put some upward pressure on headline inflation. Headline CPI increased from 2.5% to 2.6%. Finally, CPI ex food and energy – which is often called “Core-Core CPI” fell to 2.9% in March from 3.1% in February.

  • Tokyo Core CPI increased 0.2% m-o-m and increased 2.5 % y-o-y (expected +2.5%)

4th Mar 2024

Key takeaway: Tokyo inflation increased sharply in February after having fallen sharply in January. Core CPI, which excludes fresh food, increased from 1.8% in January to 2.5% in February. Although, equally important to note that this was in line with consensus expectations. There are 2 key points to understand. First, Tokyo CPI data is released ahead of the National CPI number. Second, it  is generally thought of to be adequately reflective of inflation in Japan. Hence it serves as bit of a leading indicator. There is strong anticipation that we will soon see a policy pivot from the Bank of Japan as they draw curtains on negative interest rates and Yield Curve Control. This higher inflation print bring that narrative into sharp focus. In recent weeks, we have seen more verbal indications from the Japanese Monetary Policy committee members on an upcoming shift in monetary policy, albeit to a limited extent and still a mostly accommodative stance. Headline CPI also increased from 1.8% to 2.5%. Finally, in contrast to the other 2 indicators, CPI ex food and energy – which is often called “Core-Core CPI” fell to 3.1% in February from an upwardly revised 3.3% in January.

  • Tokyo Core CPI increased 0.2% m-o-m and increased 2.5 % y-o-y (expected +2.5%)

25th Jan 2024

Key takeaway: Tokyo inflation fell sharply in January starting 2024 with a bang. Core CPI, which excludes fresh food, declined from 2.1% in December to 1.6% in January. This was substantially lower than the 1.9% consensus expectation and most importantly below the BoJ target of 2% inflation. There are 2 key points to understand. First, Tokyo CPI data is released ahead of the National CPI number. Second, it  is generally thought of to be adequately reflective of inflation in Japan. Hence it serves as bit of a leading indicator. There is strong anticipation that we will soon see a policy pivot from the Bank of Japan as they draw curtains on negative interest rates and Yield Curve Control. However, sharply falling inflation raises some questions over how soon will that materialize. Headline CPI also moderated from 2.4% to 1.6%. Finally, CPI ex food and energy – which is often called “Core-Core CPI” also fell to 3.1% in January from 3.5% in December 2023

  • Tokyo Core CPI decreased 0.2% m-o-m and increased 1.6 % y-o-y (expected +1.9%)

8th Jan 2024

Key takeaway: Tokyo inflation fell in line with expectations in December moderating from 2.7% in November to 2.4% in December. The more important Core CPI measure which excludes Fresh Food also moderated from 2.3% to 2.1%. Month over month core CPI increased 0.1% from November. Tokyo CPI is released ahead of the nation wide data and generally expected to track national numbers. Inflation has be generally been moderating in Japan in line with other global trends on the back of improving supply chains and falling energy prices. Japan inflation is closely watched by fixed income and currency markets worldwide given its impact on the future path of Japanese monetary policy.