Japan: Expect 0.4% yoy decline in the all-Japan core CPI in July - Nomura

Research Team at Nomura, forecasts a 0.4% y-o-y decline in the all-Japan core CPI in July, the same as in June.

Key Quotes

“We expect the core CPI (CPI ex energy and food (ex alcohol) and the core food CPI (food CPI ex fresh food and alcoholic beverages) to contribute to slower core CPI inflation, while energy should contribute to an acceleration, with these contributions more or less cancelling each other out. We expect growth in core core CPI and core food CPI to slow with the weak-yen benefit easing. Our July core core CPI forecast is 0.4%, narrower growth than June's 0.5%. Also, energy CPI appears likely to show a smaller decline than June, based on factors such as the rates of major electric and gas utilities.

Looking to August, we forecast Tokyo core CPI at -0.3% y-o-y. CPI has been rebased to 2015, but the July results have not yet been released for Tokyo. August forecasts envisage the same growth rate as in June. We expect the breakdown to be along the same lines as the all-Japan forecast mentioned previously. In short, we think the core CPI and the core food CPI will each have less of an impact than before, with the decreases largely offsetting an increase in the impact of energy prices. We forecast Tokyo's August core CPI at 0.3%, as we believe growth will likely slow from 0.4% in June.”