Japan: Tokyo CPI data supports BoJ hawkish stance – Societe Generale
Societe Generale’s Reo Sakida and Jin Kenzaki note that August Tokyo CPI was broadly in line with expectations, with renewed energy subsidies weighing on inflation and likely to drag on CPI through October.
Tokyo's Consumer Price Index (CPI) data, reported in August, aligns closely with market expectations, according to Societe Generale analysts Reo Sakida and Jin Kenzaki. The report indicates that energy subsidies, particularly in Japan, have put a dampener on inflation and are expected to continue influencing consumer price levels through October.
While non-fresh food prices showed a slight deceleration, service sector inflation increased primarily due to rises in rents and medical charges. The impact of these inflationary pressures on the overall national CPI has been limited thus far, but it still aligns with the Bank of Japan's (BoJ) hawkish stance. Analysts had anticipated a re-acceleration in food inflation from August, but higher upstream costs appear to require more time to reflect in consumer prices.
The analysts have previously noted that underlying price pressures are still present. Furthermore, the BoJ Deputy Governor, Himino, highlighted during a recent meeting that repricing activity is expected to ramp up in the coming months. Additionally, the Teikoku Databank survey suggests another wave of price revisions towards the end of the year, thereby supporting the BoJ's bullish monetary policy direction.
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