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Japan’s Core CPI Sees Fastest Decline in Almost Four Years

Core consumer prices across Japan declined at the fastest rate in nearly four years during the month of August, mostly on account of the government’s scheme to offer discounts to spur domestic travel and boost the country’s ailing tourism industry. According to data released by the government, Japan’s core CPI fell by 0.4% YoY in August, in line with economists’ expectations.

The core CPI reading was worse than that of the previous month when it stood at zero. The steep fall was driven by a reduction in prices of accommodation and and hotels due to the national travel discounts offered by the government.

Meanwhile, the core core CPI, which excludes volatile food and energy prices, declined 0.1% during August after gaining by 0.4% in July. This marks the first decline in core core CPI seen since March 2017.

While the reopening of the economy is expected to drive recovery, a cautious sentiment lingers among consumers and businesses, which are likely to exert downward pressure on prices in the near future. The heightened economic uncertainty due to the coronavirus pandemic is likely to keep demand weak and keep CPI readings from inching higher.

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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.
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