Japan CPI: Forecasts from four major banks, inflation likely to pick up

Japan will release October Consumer Price Index (CPI) data on Thursday, November 23 at 11:30 p.m., and as we approach release time, here are the forecasts from economists and researchers across four major banks on the next Japanese inflation figure.

The headline CPI is expected to be at 3.4% year-on-year, up from 3.0% in September, while the core CPI (excluding fresh food prices) is expected to be at 3.0% year-on-year, up from 2.8% previously published. If so, the general CPI would be even further above the inflation target.

Standard Chartered

We expect headline CPI inflation to have picked up to 3.4% year-on-year from 3.0% the previous month. Core CPI inflation is also likely to rise to 2.9% from 2.8%, reversing the downward trend of the previous three months. We expect that core CPI inflation excluding fresh food has remained below 3%, but that core inflation excluding fresh food and energy has remained above 4%, indicating that the Japan’s inflation remains rigid. The reduction in subsidies for public services is likely to have pushed up inflation. Furthermore, strong tourism may have affected the CPI. October Tokyo CPI rose more than markets expected: Headline CPI inflation rose to 3.3% from 2.8%; The national CPI will likely follow this trend.

ING

We expect headline inflation to reaccelerate to 3.3% year-on-year in October (compared to 3.0% in September). Fresh food and energy prices will be the main drivers, but prices for other services are also expected to rise, reflecting the accumulated upward pressure on input prices. Core inflation (excluding fresh food and energy) is likely to remain above the 4.0% level, which will likely make the Bank of Japan’s monetary policy lean more toward neutrality than ultra-looseness.

Citi

We expect the national core CPI (excluding fresh food only) to rise 3.0% year-on-year in October, rebounding from September’s 2.8% year-on-year rise. Meanwhile, CPI excluding fresh food and energy is likely to rise 4.1% year-on-year in October, down from the 4.2% year-on-year gain in September, and core CPI inflation excluding special factors (i.e. energy, mobile phone expenses and hotel expenses) are likely to increase 3.58% year-on-year in October, down from the 3.94% year-on-year increase recorded in September. As Tokyo CPI data for October confirm, year-on-year inflation likely moderated, especially for goods, as companies raised prices rapidly a year ago. We expect headline CPI to accelerate from +3.0% y-o-y in September to +3.5% y-o-y in October, driven by the halving of electricity and gas rate subsidies, as well as spikes in utility prices. fresh vegetables.

Wells Fargo

Although Japanese inflation has slowed in recent months, the consensus forecast is that this trend will be interrupted with the October CPI. Headline inflation is expected to accelerate to 3.4% year-on-year (from 3.0% in September), while CPI excluding fresh food would also accelerate slightly to 3.0% in October (from 2.8% in September). On the one hand, the persistence of inflation above the 2% target set by the Bank of Japan should support the idea of ​​a possible increase in interest rates during the first half of next year. However, to the extent that ongoing inflation curbs consumers’ purchasing power, this would be a partially countervailing argument. Overall, however, we expect that continued high inflation, accompanied by firmer wage growth and steady economic growth, will cause the BoJ to raise its policy rate by 10 basis points to 0.00% at its meeting. monetary policy in April next year.