–Hotel Fees Slower After 2021 Double-Digit Gains Over 2020 Subsidized Discounts
–Utilities Leading Energy Higher; Durable Goods Down As Stay-at-Home Demand Wanes
–Most of Base Effect in Mobile Phone User Fee Cuts To Last Through March
By Mas Sato
(MaceNews) – The year-on-year rise in consumer prices in Tokyo, the leading indicator of the national average, picked up in February on a surge in energy costs after losing some steam in January, which was caused by fading bases effects of a spike in hotel fees in 2021 over subsidized discounts in 2020 and the first round of property insurance premium markups, data from the Ministry of Internal Affairs and Communications released Friday showed.
Energy and processed food led year-on-year gains, offsetting the downward pressure from low-cost monthly data plans introduced in April by major mobile phone carriers and additional discounts offered in recent months. A slightly higher increase in hotel fees also canceled the downtrend in durable goods, such as refrigerators.
The momentum in rising electricity charges intensified this month while the prices of gasoline and heating oil increased at about the same pace as seen last month.
The key points from the Tokyo CPI data:
- The core consumer price index (excluding fresh food) in the capital’s 23 wards marked the sixth straight year-on-year gain, up 0.5% from a year earlier in February after rising 0.2% in January and 0.5% in December. It was firmer than the median economist forecast of a 0.4% rise but consumer inflation remains relatively subdued in Japan as companies are cautious about passing surging producer prices on to customers for fear of losing market share.
- The core-core CPI (excluding fresh food and energy) – a key indicator of the underlying trend of inflation – dipped 0.6% for the 11th straight year-on-year decline after slumping 0.7% the previous month, which was the largest drop since -0.7% in April 2021. This measure does not receive support from a recovery trend in energy prices seen earlier this year.
- The total CPI jumped 1.0% on year in February, marking the sixth straight year-on-year gain after rising 0.5% in January and 0.8% in December. It matched the 1.0% rise in December 2019. Fresh food prices, a volatile factor, surged 12.2% on year this month, pushing up the overall index by 0.46 percentage point, after rising 9.3% with a positive 0.36-point contribution the previous month.
- Energy prices surged 24.2% on year in February, pushing up the total index by 1.06 percentage point (vs. +19.9%, +0.87 point the previous month). The pace of increase in gasoline prices decelerated further to +21.0% y/y (+0.11 percentage point contribution) from +22.0% (+0.11 point) in January. Electricity charges continued rising at a faster pace, up 24.0% (+0.58 point contribution) after +19.3% (+0.47 point) the previous month. City gas prices also jumped 26.8% (+0.36 points) vs. +20.7% (+0.27 point).
- Food excluding perishables gained 1.2% (+0.25 point contribution) in February after rising 0.9% (+0.20 point) in January. The pace of increase has picked up again after widespread markups in October.
- By contrast, household durable goods prices slipped 4.1% from a year earlier in February, pushing down the CPI by 0.05 percentage point. It followed a 1.0% drop (-0.01 point) in January, 0.9% fall (-0.01 point) in December and a 1.9% slump in November (-0.02 point) after months of increase. Initial strong demand for electric appliances and furniture arising from the stay-at-home lifestyle has waned.
- Accommodations costs rose 6.0% on year (+0.07 point contribution) in February after the pace of increase decelerating sharply to 0.6% (+0.01 point) in January from +44.0% (+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 and has been cautious about resuming it. The program was launched in July 2020 to subsidize 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 February, compared to a 53.6% drop (-1.12 point) the previous month. Most of the base effect is expected to last at least through the end of March.
Contact this reporter: max@macenews.com
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