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Friday’s roundup: Japan’s January consumer prices, household spending

March 2, 2007
By Ken Worsley


First, consumer prices:

The core consumer price index, which excludes fresh food but not energy, fell to zero in January and was flat for the first time in eight months. December’s core CPI data had shown an increase of 0.1%, which had been weaker than expected.

We should keep in mind that Japan’s methodology for arriving at core CPI differs from that of most other developed nations in that Japan currently includes energy and fuel prices as part of its core CPI.

Last month, after the weak CPI data was announced, Business Week reported that it would be hard for the BOJ to raise interest rates with such statistics just having been published. It actually wasn’t very hard all all; the BOJ voted 8-1 to raise interest rates at its February meeting.

Now Business Week is sounding more cautious: “Some speculate the BOJ will wait until midyear parliamentary elections in Japan before deciding to raise rates again.”

I’m left to wonder: “Some” being whom?

They do provide with this fascinating bit of illogic from Chief Cabinet Secretary Yasuhisa Shiozaki:

The various indicators are not necessarily moving in one direction, therefore there is no change to the condition that the end of deflation is in sight.

Shiozaki, it’s worth noting, is rumored to be replaced soon, should Prime Minister Abe decide on a cabinet re-shuffle.

In other news, household spending rose to 0.6% in January, which was better than the anticipated 0.3%. And, the unemployment rate dropped 0.1%, falling from 4.1% to 4.0%. It had been predicted to remain flat.

Filed Under Consumer Price Index, Consumer Spending, Economic Reports 

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Comments

5 Responses to “Friday’s roundup: Japan’s January consumer prices, household spending”

  1. John S on March 3rd, 2007 1:38 am

    So…has anyone figured out how much the reduction in oil prices has affected the core CPI? Would it be about time for Japan to yank them out of the equation and skew it like happened with the GDP figures a few years back?

  2. Adamu on March 6th, 2007 1:30 am

    Nikkei on CPI move:

    Saturday, March 3, 2007

    Prices To Stay Flat Due To Oil Products, Cell Phone Fees

    TOKYO (Nikkei)–Prices in Japan were unchanged in January because of the slower rise in prices of petroleum products and lower cellular phone fees. And while few analysts believe that the country will slip back into deflation, prices are expected to be flat for the time being.

    The Ministry of Internal Affairs and Communications said Friday that the nationwide core consumer price index remained unchanged from a year earlier for the first time in eight months in January. This figure, which excludes perishables, had been showing year-on-year growth since last June before flattening again in January.

    And in case you don’t get all your monetary policy news from Kikko’s blog like I do, here’s a nice succinct assessment of the recent raise in interest rates that cuts through any doubt as to what’s going on:

    支持率回復に必死になってるアベシンゾーは、村上ファン怒のインサイダー取引で大儲けした守銭奴、日銀の福井俊彦総裁に、ニポンの景気が良くなってるって演出をさせるために、金利の引き上げを指示した。

    Shinzo Abe, frantically trying to restore his approval ratings, ordered BOJ Governor Toshihiko Fukui, the miser who made a fortune off of insider trading in the Murakami Fund, to raise interest rates to make it look like Japan’s economy is improving.

  3. Ken Worsley on March 6th, 2007 1:34 am

    Adam…

    …?

    …what do you think about such a claim?

  4. Adamu on March 6th, 2007 9:30 am

    It’s kind of ridiculous… Maybe the BOJ raising interest rates is a positive for Abe to show that the economy is doing better than it really is, but looking at what happened I’d say it’s more like Abe and his people stepped back and let the BOJ do what it wanted this time.

  5. Ken on March 6th, 2007 1:30 pm

    You know what it was…I was tired or drinking and didn’t pick up on the sarcasm of, “here’s a nice succinct assessment of the recent raise in interest rates that cuts through any doubt as to what’s going on:”

    I got it now…

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