Japan’s national CPI rises 3.6% year-on-year in December, core CPI rises as expected

Japan’s National Consumer Price Index (CPI) rose 3.6% year-on-year in December, compared with the previous reading of 2.9%, according to the latest data released by the Japan Statistics Bureau on Friday.

More details reveal that the National CPI excluding fresh foods stood at 3.0% year-on-year in December compared to 2.7% previously. The figure was in line with the market consensus of 3.0%.

The CPI excluding fresh food and energy rose 2.4% year-on-year in December, compared to the previous reading of 2.4% (revised from 2.7%).

Market Reaction to Japan National CPI Data

Following Japan’s CPI inflation data, USD/JPY rises 0.08% on the day to 156.09.

Japanese Yen FAQs


The Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is determined broadly by the performance of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of Japanese and US bonds or the risk sentiment among traders, among other factors.


One of the mandates of the Bank of Japan is currency control, so its movements are key for the Yen. The BoJ has intervened directly in currency markets on occasion, usually to lower the value of the Yen, although it often refrains from doing so due to the political concerns of its major trading partners. The BoJ’s current ultra-loose monetary policy, based on massive stimulus to the economy, has caused the depreciation of the Yen against its main currency pairs. This process has been exacerbated more recently by a growing policy divergence between the Bank of Japan and other major central banks, which have opted to sharply raise interest rates to combat decades-old levels of inflation.


The Bank of Japan’s ultra-loose monetary policy stance has led to increased policy divergence with other central banks, particularly the US Federal Reserve. This favors the widening of the spread between US and Japanese 10-year bonds, which favors the Dollar against the Yen.


The Japanese Yen is often considered a safe haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. In turbulent times, the Yen is likely to appreciate against other currencies that are considered riskier to invest in.

Source: Fx Street

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