— Both Core and Total CPI Measures Mark 5th Straight Y/Y Gains on Energy
— Utilities Push Up Overall Energy Costs; Durable Goods Prices Slide
By Max Sato
(MaceNews) –
Consumer prices in Japan posted the fifth straight year-on-year rise in January but the pace of increase decelerated sharply as the 2021 base effects of hotel fee gains over subsidized discounts in 2020 and the first round of markups in property insurance premiums have faded, data from the Ministry of Internal Affairs and Communication released Friday showed.
Rising utilities and processed food costs have propped up inflation while stay-at-home demand for furniture and appliances has waned. Companies have been relatively cautious about raising retail prices for fear of losing market share despite surging producer prices.
The CPI remains under downward pressure from low-cost monthly data plans introduced in April 2021 by major mobile phone carriers and additional cheaper plans for low data usage offered later.
The Bank of Japan board expects the core consumer inflation to rise 1.1% in both fiscal years 2022 and 2023, up from an estimated zero growth in fiscal 2021 ending in March but well below the bank’s 2% target.
The key points from CPI data:
* The underlying inflation rate – measured by the core-core CPI (excluding fresh food and energy) – marked the 10th straight drop, plunging 1.1% on year after falling 0.7% in December. This narrow measure is not receiving support from higher energy markets.
* The total CPI gained 0.5% on year in January for the fifth consecutive year-on-year increase after jumping 0.8% in December. September’s 0.2% gain was the first increase in 13 months. Volatile fresh food prices rose 6.5% on year and pushed up the overall index by 0.26 percentage point after surging 8.0% (+0.30 point) the previous month.
* Among key components of the CPI basket of goods and services: Energy continued to rise at a high pace, up 17.9% on year (+1.23 percentage point contribution) in January vs. +16.4% (+1.12 points) in December; gasoline rose but lost some steam, up 22.0% (+0.40 point) vs. +22.4% (+0.40 point); electricity picked up the pace of increase, up 15.9% (+0.51 point) vs. +13.4% (+0.43 point); food excluding perishables +1.3% (+0.28 point) vs. +1.1 (+0.25 point).
* Most of the downward base effects of government-led discounts on telecom costs remain at least until the end of March 2022. Mobile communications fees plunged 53.6% on year (-1.47 percentage points) in January after slumping 53.6% (-1.48 percentage points) in December.
* Household durable goods prices posted the third straight year-on-year drop in January, down 3.1% and pushing down the index by 0.04 point after falling 2.9% (a negative 0.04 point contribution) in December. The initial demand for electric appliances and furniture arising from the stay-at-home lifestyle has waned.
* The year-on-year increase in accommodations costs shrank to 0.6% (+0.01 point contribution) in January after posting double-digit percentage gains in the second half of 2021, ending with a 44.0% surge (+0.29 point contribution) in December. 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.
* Property insurance premiums rose 1.7% on year in January after rising 15.8% in December, with their positive contribution to the CPI falling to 0.01 percentage point from 0.11 point.