All-Japan core CPI in February in line with market consensus – Nomura

Analysts at Nomura note that the February 2017 all-Japan core CPI was +0.2% y-y, in line with the consensus (Bloomberg survey median) forecast and up from +0.1% in January.

Key Quotes

“The breakdown shows a marked upward contribution from energy prices. With rates of increase in such categories as electricity charges and gasoline prices picking up, energy prices as a whole in February rose 1.6% y-y, the largest increase since December 2014. In contrast, the core core portion saw a decline of 0.1% y-y in February, turning down after rising 0.1% in January. The fading in the core CPI itself, however, was no major surprise, having to some extent been flagged in the Tokyo area data for February.”

“Expecting rise in all-Japan core CPI, but risk of loss of momentum in near term

An unexpected aspect of the figures released today was the weakness of the core CPI for Tokyo. Looking ahead, we expect y-y increases in the all-Japan CPI to pick up as the positive contribution from energy prices expands and underlying recovery in the core portion gradually takes hold. In our view, however, caution is needed on risks of the pickup in the all-Japan core CPI losing momentum in the near term as recovery in the core portion is put back slightly.”