– Hotel Fees Up After Government Ended Subsidies For Travel in December
– Private University Tuitions Up As Base Effect of Subsidies Wanes
– Smaller Drop in Auto Insurance Premiums Also Ease Core CPI Drop
By Max Sato
(MaceNews) – Japan’s core consumer price index posted only a slight drop on year in April, as higher energy and accommodation costs among other items offset the large impact of mobile communications fee discounts, data from the Ministry of Internal Affairs and Communication released Friday showed.
The downward effect of government subsidies for private university tuitions that began last April has disappeared and auto insurance premiums showed a smaller drop.
In its quarterly Outlook Report issued last month, the Bank of Japan said its board’s median inflation forecast for fiscal 2021 was revised down to +0.1% from +0.5% made in January in light of reductions in mobile phone charges by many carriers for various plans. The forecast for fiscal 2022 was revised up to +0.8% from +0.7%.
In its first estimate, the board projected that the core CPI would rise 1.0% in fiscal 2023 ending in March 2024, which is still far below the BOJ’s 2% target.
The second five-year term of BOJ Governor Haruhiko Kuroda is scheduled to end on April 8, 2023.
The key points from CPI data:
* The national average core consumer price index (excluding fresh food) slipped 0.1% from a year earlier in April, coming in firmer than the median economist forecast of a 0.2% drop and following -0.1% in March and -0.4% in February. It was the ninth straight year-on-year decline in the core CPI, and the 10th in the past 12 months.
* The underlying inflation rate — measured by the core-core CPI (excluding fresh food and energy) – fell 0.2% on year in April, marking the first y/y fall in four months after rising 0.3% in March. This narrow measure didn’t receive support from recovering energy markets.
* Total CPI slumped 0.4% on year in April after easing 0.2% in March. Fresh food prices plunged 7.3% on year and trimming the overall index by 0.32 percentage point after falling 1.5% (-0.06 point contribution) the previous month.
* The biggest factor behind the year-on-year decline in the CPI was lower mobile communications fees, which plunged 26.5% on year and pushed down the total CPI by 0.50 percentage point in April, compared to a 1.9% rise (+0.04 point) in March. Prime Minister Yoshihide Suga, who took office last year, has been urging mobile carries to lower voice and data communications costs since he was chief cabinet secretary to his predecessor Shinzo Abe.
* Among other key components of the CPI basket of goods and services: Energy +0.7% y/y (+0.05 percentage point contribution) in April vs. -4.3% (-0.34 point) in March; gasoline +13.5% y/y (+0.26 point) vs. +0.9% (+0.02 point); food excluding perishables unchanged y/y (+0.01 point) vs. unchanged (+0.01 point).
* Household durable goods prices remained on the uptrend, +3.0% on year (+0.03 point contribution) vs. +4.4% (+0.05 point) the previous month. Stay-home COVID lifestyles has pushed up demand for electric appliances and furniture.
* Accommodations +3.1 y/y (+0.03 point contribution) in April vs. unchanged (+0.00 point) in March. The downward pressure from hotel fees has eased after the government suspended its controversial program to support the tourism industry with subsidized hefty discounts on domestic travel, effective late December.
* The base effect of subsidized private university tuitions, which were took effect in April 2020, has waned. Those tuitions now rose 0.7% on year this month (+0.01 point contribution) after falling 4.3% (-0.04 point) in March.