Japan: First reading of CPI above zero since February - BBH

Research Team at BBH, suggests that the main data has come from Japan today where at the headline level, Japan's CPI rose to 0.1% y/y from -0.5%.    

Key Quotes

“It is the first reading above zero since February.  However, it exaggerates improvement.  What the BOJ calls the core rate (excluding fresh food) remained steady at -0.4% y/y.  It has been negative for eight months, which is the longest deflation steak since 2009-2011.”

“What happened in October is that because of the typhoon and poor weather, fresh food prices roses by nearly 11.5%.  We are fairly confident that the upward pressure on fresh food prices will not be sustained.  At the same time, there was another encouraging sign that deflation may be ebbing.  The measure of Japanese inflation that comes close to the US core rate (excluding both food and energy) rose from its lowest pace since September 2013 (zero) to 0.2%.”

“The dollar's gains were initially extended to almost JPY114 in Asia, but corrective forces quickly emerged and the greenback fell to JPY112.50 by late in the session.  Europe has seen some consolidation, but there is scope for additional near-term losses that could extend toward JPY111.85-JPY112.00 and still not do much technical damage to the charts.”

“Meanwhile, Japan's Topix advance was extended for an 11th session.  It has rallied for three consecutive weeks, the longest streak since May.  The MSCI Asia-Pacific Index rose 0.6%, the fourth gain this week, and managed to snap a four-week losing streak with a 1.3% advance.   European bourses are slightly higher in a mixed session that is seeing health care and utilities post small gains.  However, energy, materials, and information technology sectors have eased.”