All main measures of inflation in Tokyo in April and all of Japan in March are expected to be in the red: headline and core (excluding fresh food) prices in Tokyo are seen down 0.1% from a year earlier despite a 0.2% gain over the month. For all of Japan, core and headline prices should rise 0.3% over the month, though this would still leave core prices down 0.2%, their biggest fall in fifteen months, and headline prices down 0.1%, improving from the 0.2% decline in February.
The data is unlikely to accord with that of Bank of Japan Governor Fukui, who said last Thursday that core CPI is likely to follow a positive trend. If it does, that will likely reflect the impact of the renewed rise in oil prices and the weak yen more than anything else; domestic demand remains weak and there seems little upward momentum in prices from domestic factors.
Excluding energy prices, as most countries' core indices do, consumer prices have been even weaker, those for Tokyo fell 0.3% from a year ago in March, while those for Japan fell by the same amount in February. Fukui clearly is trying to justify the last rate hike in February but unfortunately the data are not in accordance with either his views or policies.
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