October consumer price index up 1.0 percent, first rise this year

November 30, 2007
By Ken Worsley

Earlier today, the Statistics Bureau announced that Japan’s core consumer price index had risen 1.0% in October. This was the first rise seen in 2007.

The rise, however, appears to be on the back of increased fuel costs, especially for gasoline. Core CPI in Japan excludes fresh food but includes energy costs. Gasoline prices rose 3 percent in October, while household electric bills went up 1.4% on average.

With energy costs stripped out, CPI was down 0.1 percent.

When food costs are factored in, the CPI saw a rise of 0.3 percent.

Downward pressure on prices continues to be provided by home electronics. In October, flat-panel TV prices fell 17.1 percent, laptop prices fell 28.4 percent, and desktop computers saw a 16.6 percent drop in prices.

We don’t see these figures as providing the Bank of Japan with grounds enough to raise interest rates in December.

At a press conference this afternoon, Minister of Economy and Fiscal Policy Hiroko Ota stated that Japan was still in deflation, telling reporters, “The consumer price situation basically hasn’t yet changed.” Concerning the consequences of higher food and fuel prices, Ota expressed fear that they “could erode consumer confidence and business sentiment at small and medium-sized enterprises.”

At his press conference, Finance Minister Fukushiro Nukaga stuck to stating the obvious:

The consumer price index rose from a year earlier. I would like to keep closely monitoring how high oil prices will affect overall price conditions. I will do the same for job conditions.

In other words, he plans on showing up at work.

Filed Under Consumer Price Index, Economic Reports, Ministry of Finance