— Higher Air Conditioner, Education Prices Also Ease Mobile Discount Impact
By Max Sato
(MaceNews) – Consumer prices in Tokyo, a leading indicator of the national average, were unchanged from a year earlier in June after several months of declines, as recovering energy prices and gains in some food prices eased the downward pressure from sharply lower mobile communications fees introduced in April, data from the Ministry of Internal Affairs and Communications released Friday showed.
All of the three key CPI measures were firmer on month, leading to unchanged results on year. In addition to the recent pickup in gasoline prices, utility charges showed smaller declines on year.
Seasonal demand pushed up the prices for air conditioners while supplementary education costs for elementary school students marked a fairly large gain, both supporting overall consumer prices.
But unlike in the U.S. where inflation fears have flared up, consumer prices in Japan are expected by the Bank of Japan to remain more or less flat for some time, showing little response to higher domestic producer prices. Consumption on services has been sluggish this year due to restrictions on economic activity imposed by the government.
The key points from the CPI data:
The core consumer price index (excluding fresh food) in the capital’s 23 wards was unchanged on the year in June after falling 0.2% in May, which was the 10th straight year-on-year drop. The median economist forecast was for -0.1%.
The core-core CPI (excluding fresh food and energy) – a key indicator of the underlying trend of inflation – was also flat on year, after falling 0.1% in May and being unchanged in April. This measure does not receive support from recovering gasoline prices.
The total CPI was unchanged on year this month after sliding for eight months and picking up from May’s 0.4% decline. Fresh food prices rose 0.7% y/y in June after falling for several months, pushing up the overall index by 0.03 percentage point, compared to a 5.1% drop and a negative 0.22-point contribution in May.
The downward pressure continued to come from lower mobile communications fees, which fell 15.3% on year and trimmed the total CPI by 0.47 percentage point in June, compared to a 27.9% drop (-0.44 point) in May. Major mobile phone carriers slashed monthly communications fees for various plans in April in response to a persistent government request.
The impact of lower energy costs, particularly from utilities, continued to ease. Energy prices dipped just 0.4% on year in June, lowering the total index by 0.02 percentage point (vs. -1.3%, -0.07 point the previous month). The y/y increase in gasoline prices decelerated slightly to +17.4% y/y (+0.11 percentage point contribution) this month from +19.3% (+0.12 point) last month.
Food excluding perishables were below year-earlier levels for the second straight month, down 0.3% in June (-0.07 percentage point) vs. -0.2% (-0.04 point) in May.
Accommodations +0.9% y/y (+0.01 point contribution) in June vs. +0.9 (+0.01 point contribution) in May. The government suspended its controversial ‘Go To Travel’ campaign in late December after seeing a spike in new coronavirus cases. The program was launched in July to subsize hefty discounts on hotel fees and domestic transportation costs, and was aimed at shoring up the hard-hit tourism industry.
Among gainers, household durable goods, such as air conditioners during Japan’s long humid summer, continued rising on year, up 5.7% y/y (a positive 0.06-point contribution) in June vs. +4.7% (+0.05 point) the previous month. Demand for electric appliances and furniture remains generally strong in stay-home lifestyles during the pandemic.
Supplementary education costs gained 11.4% in June, pushing up the CPI by 0.11 point, vs. +4.9% (+0.05 point) in May.
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Contact this reporter: max@macenews.com.
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