27 July 2015, 09:46
In Japan, factors such as the passing-on of price increases to products as a
result of costpush inflation caused by yen depreciation and the recovery in
domestic demand are pushing up inflation.
"Assuming that oil prices remain at the current level, there is a risk that CPI will remain at around 0% yoy or even temporarily fall below 0% yoy. Japan's nationwide CPI (excluding fresh food) probably remained flat (0.0% yoy) in June", says Societe Generale.
However, this will still not be enough to reach the BoJ's 2% price stability target on a sustained basis. The BoJ stresses that inflation is strengthening as a result of yen depreciation and domestic demand recovery which is also putting upward pressure on food costs.
"Prices will pick up on a yoy basis. However, CPI is only expected to reach around +0.5% yoy by yearend. A modest inflation rate and a firm wage increase should enable real wages to increase, and consumption should expand as a result. Domestic demand expansion resulting from wage increases and further yen depreciation should push up inflation to around +1.5% by the end of FY2016", according to Societe Generale.
The BoJ sees it as difficult to capture the whole picture of inflation by merely looking at "core CPI" (ex fresh food) which includes falling energy prices and the same for "core core CPI" which excludes food and energy.
Source : FX-Primus
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#Forex
#SaleForex
#MoreStagnant
#JapanInflation
#InJune
#BOJ_Stresses
#CostPushInflation
"Assuming that oil prices remain at the current level, there is a risk that CPI will remain at around 0% yoy or even temporarily fall below 0% yoy. Japan's nationwide CPI (excluding fresh food) probably remained flat (0.0% yoy) in June", says Societe Generale.
However, this will still not be enough to reach the BoJ's 2% price stability target on a sustained basis. The BoJ stresses that inflation is strengthening as a result of yen depreciation and domestic demand recovery which is also putting upward pressure on food costs.
"Prices will pick up on a yoy basis. However, CPI is only expected to reach around +0.5% yoy by yearend. A modest inflation rate and a firm wage increase should enable real wages to increase, and consumption should expand as a result. Domestic demand expansion resulting from wage increases and further yen depreciation should push up inflation to around +1.5% by the end of FY2016", according to Societe Generale.
The BoJ sees it as difficult to capture the whole picture of inflation by merely looking at "core CPI" (ex fresh food) which includes falling energy prices and the same for "core core CPI" which excludes food and energy.
Source : FX-Primus
#FX
#Forex
#SaleForex
#MoreStagnant
#JapanInflation
#InJune
#BOJ_Stresses
#CostPushInflation
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