Japan’s consumer price index up 1.9% in October; deflationary fears afoot

December 2, 2008
By Ken Worsley

Last Friday, the Ministry of Internal Affairs and Communications announced that Japan’s core consumer price index rose 1.9% in October, down slightly from the 2.3% rise seen in September, and up for the 13th consecutive month.

As Japan includes energy prices as part of its core CPI, it’s also helpful to look at what the CPI looks like with energy stripped out. Here’s a breakdown of CPI categories for October:

October general nationwide consumer price index: +1.7% (+2.1% in September)
October general nationwide consumer price index (excluding rent): +2.1% (+2.4% in September)
October nationwide core CPI (excluding fresh food): +1.9% (+2.3% in September)
October nationwide consumer price index (excluding fresh food and energy): +0.2 (+0.2% in September)

In August, we saw CPI flat when fresh food and energy were both stripped out. This figure returned to positive territory in September, showing a +0.2% increase. That +0.2% increase was repeated in October.

A breakdown of price increase by major categories:

Fuel, light and water charges +8.0% (Previous: +9.2%)
Food +3.2% (+3.0%)
Transportation and communication +1.7% (+3.8%)
Education +0.7% (+0.6%)
Clothes and footwear +0.6% (+0.5%)
Furniture and household utensils +0.3% (+0.4%)
Housing +0.2% (+0.2%)
Miscellaneous +0.1% (+0.5%)
Medical care -0.1% (+0.1%)
Reading and recreation -0.2% (-0.3%)

In October, Medical care joined Reading and recreation in the negative area. Now that fuel prices are falling - and are poised to show year-on-year decreases in a few months - and CPI growth is below its rates of August and September, talk that Japan’s economy might experience another spell of deflation is afoot. The first indicator to watch will be the “core core” prices, with fuel and energy costs stripped out.

Filed Under Consumer Price Index, Economic Reports