–Utilities Continue Leading Energy Costs Higher; Gasoline Rise Slows
–Total CPI Also Pushed Up by Another Surge in Fresh Food Prices
–Most Base Effects of Sharp Mobile Phone Charge Discounts To End This Month
By Max Sato
(MaceNews) – The year-on-year rise in consumer prices in Tokyo, the leading indicator of the national average, hit an over two-year high in March on rising energy and food costs after losing some steam in January on fading base effects of higher hotel charges, data from the Ministry of Internal Affairs and Communications released Friday showed.
Energy and processed food continued leading 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 later. Most of their base effects will end this month. A smaller drop in household durable goods prices supported the pickup in the CPI.
The increase in electricity and city gas charges accelerated further while gasoline price gains slowed from a recent peak, reflecting earlier costs of importing crude oil.
The key points from the Tokyo CPI data:
* The core consumer price index (excluding fresh food) in the capital’s 23 wards rose 0.8% in March, coming in firmer than the median economist forecast of a 0.7% rise and marking the seventh straight year-on-year rise after rising 0.5% in February, 0.2% in January and 0.5% in December. It was the largest gain in more than two years since December 2019, when the index rose 0.8%.
* The core-core CPI (excluding fresh food and energy) – a key indicator of the underlying trend of inflation – dipped 0.4% for the 12th straight year-on-year decline after sliding 0.6% the previous month. This measure does not receive support from higher energy prices but the pace of year-on-year drop continued decelerating in the face of markups in other items.
* The total CPI jumped 1.3% on year in March, marking the seventh straight year-on-year gain after rising 1.0% in February. It was the fastest rise in nearly three years since April 2019, when the index also rose 1.3%. Fresh food prices, a volatile factor, surged 13.7% on year this month, pushing up the overall index by 0.50 percentage point, following a 11.6% increase with a positive 0.44-point contribution the previous month.
* Energy prices rose 26.1% on year in March, pushing up the total index by 1.16 percentage points (vs. +24.2%, +1.06 points the previous month). The pace of increase in gasoline prices decelerated further to +17.7% y/y (+0.10 percentage point contribution) from +21.0% (+0.11 point) in February. Electricity charges continued rising at a faster pace, up 26.7% (+0.65 point contribution) after +24.0% (+0.58 point) the previous month. City gas prices also soared 29.5% (+0.40 points) vs. +26.8% (+0.36 point). Utilities providers plan to hike household charges further in April.
* Food excluding perishables gained 1.6% (+0.33 point contribution) in March after rising 1.2% (+0.25 point) in February. The pace of increase continued to accelerate after widespread markups in October.
* By contrast, household durable goods prices fell 1.1% from a year earlier in March, pushing down the CPI by 0.01 percentage point, but the pace of decline slowed from a 4.1% slump (-0.05 point) in February. Initial strong demand for electric appliances and furniture arising from the stay-at-home lifestyle has waned, with overall durable goods prices began falling on the year in November.
* Accommodations costs rose 5.6% on year (+0.06 point contribution) in March after rising 6.0% (+0.07 point) in February and slowing 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 52.7% on year and trimmed the total CPI by 1.08 percentage points in March, compared to a 53.6% drop (-1.12 point) the previous month.