— Base Effect of 1st Round Property Insurance Premium Hikes Also Disappears
— Rising Utilities Continue Pushing Up Energy Costs; Processed Food Also Up
— January Tokyo Total CPI Y/Y Gain Slows Due to Smaller Fresh Food Price Rise
By Max Sato
(MaceNews) – The energy-led year-on-year rise in consumer prices in Tokyo, the leading indicator of the national average, shrank in January as the base effects of subsidized sharp discounts on hotel fees and the first round of markups in property insurance premiums have faded, data from the Ministry of Internal Affairs and Communications released Friday showed.
Energy and processed food prices picked up their pace of year-on-year increase, offsetting the lingering downward pressure from low-cost monthly data plans introduced in April 2021 by major mobile phone carriers and additional discounts offered later. Most of this base effect will disappear at the end of March.
While gasoline and heating oil prices have lost some upward momentum in line with softer crude oil markets weeks ago, electricity and city gas charges continued rising due to the time lag between an earlier surge in imported raw material costs and power generation.
The key points from the Tokyo CPI data:
* The core consumer price index (excluding fresh food) in the capital’s 23 wards marked the fifth straight year-on-year gain, up 0.2% from a year earlier in January, coming in weaker than the median economist forecast of a 0.3% rise. The 0.5% rise in December was the highest increase since the 0.5% rise in February 2020.
* The core-core CPI (excluding fresh food and energy) – a key indicator of the underlying trend of inflation – plunged 0.7% for the 10th straight year-on-year decline after falling 0.3% the previous month. It was the largest drop since -0.7% in April 2021. This measure does not receive support from higher energy prices.
* The total CPI rose 0.5% on year in January, marking the fifth straight year-on-year gain after surging 0.8% in December, which was the fastest pace of increase since the 1.0% rise in December 2019. Fresh food prices, a volatile factor, rose 8.5% on year this month, pushing up the overall index by 0.33 percentage point, after surging 10.4% and making a positive 0.38-point contribution the previous month.
* Energy prices rose 19.9% on year in January, pushing up the total index by 0.87 percentage point (vs. +16.9%, +0.74 point the previous month). The pace of increase in gasoline prices decelerated slightly to +22.0% y/y (+0.11 percentage point contribution) from +22.7% (+0.11 point) in December. Electricity charges continued rising at a faster pace, up 19.3% (+0.47 point contribution) after +16.3% (+0.40 point) the previous month. City gas prices also jumped 20.7% (+0.27 points) vs. +15.9% (+0.22 point).
* The average price of regular gasoline in Tokyo stood at Y169.5 a liter on Jan. 11 (+23.0% y/y) for the second straight week-to-week rise, data from the Agency for Natural Resources and Energy showed. The latest Tokyo CPI data were collected sometime between Jan. 12 and Jan. 14. Both Tokyo and national average gasoline prices continued rising through Jan. 24, reflecting a rebound in oil markets.
* Food excluding perishables gained 0.9% (+0.20 point contribution) in January after rising 0.7% (+0.15 point) in December. The pace of increase picked up again after widespread markups a few months ago.
* By contrast, household durable goods prices fell 1.0% from a year earlier in January, pushing down the CPI by 0.01 percentage point. It followed a 0.9% drop (-0.01 point contribution) in December and a 1.9% slump in November (-0.02 point) after months of increase. Initial strong demand for electric appliances and furniture needed for stay-at-home lifestyles has waned as more people have resumed commuting to work despite the lingering pandemic.
* The year-on-year increase in accommodations costs shrank to just 0.6% on year (+0.01 point contribution) in January from +44.0% on year (+0.35 point) in December and +57.6% (+0.42 point) in November. The government suspended its controversial ‘Go To Travel’ campaign in late December 2020 after seeing a spike in coronavirus cases. The program was launched in July 2020 to subsize hefty discounts on hotel fees and domestic transportation costs.
* The downward pressure continued to come from lower mobile communications fees, which plunged 53.6% on year and trimmed the total CPI by 1.12 percentage points in January, compared to a 53.6% drop (-1.13 point) the previous month.