JPY: All-Japan core CPI for January 2017 to move into positive territory - Nomura

Yasuhiro Takahashi, Research Analyst at Nomura forecasts that the all-Japan core CPI for January 2017 will move into positive territory, coming in at +0.2% y-y, much stronger than -0.2% in December 2016.

Key Quotes

“We think a smaller decline for energy will contribute strongly to boosting core CPI. We think gasoline prices are likely to improve as well as electricity and gas charges. We also expect the core CPI, which excludes energy and food (except alcoholic beverages), to boost the core CPI, although not to the same extent as energy prices. We forecast the all-Japan core CPI for January will come in at +0.1% y-y, up from 0.0% in December. The core CPI for the Tokyo area came in at 0.0%, up from -0.2% in December. Although we need to bear in mind that the core CPI for the Tokyo area has been volatile recently, the all-Japan core CPI is likely to recover too, in our view.”  

“For February, we forecast the Tokyo area core CPI will be -0.1% y-y, versus -0.3% in January, mainly reflecting a smaller decline for energy. We expect an ongoing recovery for gasoline, as well as for electricity and gas charges. We forecast the Tokyo area core CPI will come in at 0.0% for February, the same as in January. Although the yen weakened toward the end of 2016, we think it will take some time for the boost to prices from that to clearly appear.”