If you can recall from a few weeks ago, the BOJ (Bank of Japan) governor Kuroda was beating his chest for the pickup in Japanese inflation and domestic demand. It´s been such a long time since the Japanese economy entered this deflationary path after the 90s Asian financial crisis that anything above 0% seems like a great achievement. 

But, I´m sure this morning´s economic data from Japan must have put the BOJ back in its chair. The Japanese inflation report was on the soft side once again and when economists refer to Japanese inflation as soft, it´s very likely that the numbers are negative. That was the case today with the Japanese core CPI (consumer price index) at -0.4% and the Tokyo core CPI at -0.6%. 

It seems a bit strange to me that inflation in Tokyo is lower than in the rest of the country. But then again, I´m, used to compare prices in London with those for the rest of the UK and the Japanese economy does not exactly  function as the western economies. 

This is very well portrayed by the Japanese unemployment rate. It ticked up one point to 3.1% which obviously is not a good thing, but if the western economies had this level of unemployment it would be considered as a triumph. 

That said, the low level of unemployment in Japan is not helping the wages pick up, thus keeping consumer spending undermined. The annualized Japanese household spending declined by 1.5% when it was expected to grow by 0.2%. This has reduced the demand in different sectors of the economy and the housing starts declined to 6.7% from 12.7% last year. 

Sorry Kuroda, the Abenomics and the free cash the BOJ is throwing at the Japanese markets are not filtering through the real economy as intended. 

The funny thing thou is that JPY has been acting strange to the economic data during this year. A currency is supposed to lose value when the numbers are negative, yet, the Yen has rallied whenever the economic calendar goes red. Between a sick economy and the safety of safe haven currencies, the market always pick the safety, hence the JPY rallies on disappointing data, so beware guys.