Sales Tax Hike Fails to Boost Japan’s Core CPI in October

Japan’s annual CPI rose very slightly in October despite the implementation of the sales tax hike from 8% to 10%. According to data released by the Japanese government earlier today, core CPI grew by 0.4% YoY in October, slightly higher than the 0.3% rise seen in September and coming in line with economists’ expectations.

Without taking into account the effect of the sales tax hike and the free child care which was introduced, October’s core consumer inflation stood at 0.2%, less than that in September. Raw material and labor costs have gone up while electricity costs edged lower, driving the weakness in inflation.

The slight change in CPI points to weakening domestic demand which is likely to exert a significant downward pressure on Japan’s already strained economic growth. Japan’s export-oriented economy has been facing external risks as a result of the ongoing US-China trade war, which has considerably weakened its exports and even strengthened the safe haven currency, dealing a double blow to Japan.

Despite repeated stimulus measures by the BOJ, inflation continues to remain well under the 2% target, and this is unlikely to change anytime soon in the face of continuing weakness in the global economy. Analysts are expecting inflation to stagnate, which would force the BOJ to unveil more monetary easing policies, which are already ultra-loose to begin with.

Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments