Yasuhiro Takahashi, Research Analyst at Nomura, forecast the all-Japan core CPI for May will come in at -0.5% y-y, versus -0.3% in April.
“We expect effects from the core CPI and the core food CPI to have contributed substantially to the slowdown in core CPI. The core CPI for the Tokyo area came in at +0.5% in May, a slowdown from +0.6% in April. We expect the all-Japan core CPI for May to generally follow this pattern to come in at +0.6% y-y, lower than the +0.7% figure for April.
In addition, taking the Nikkei CPINow and the Tokyo-area results into account, we think a comparatively sharp slowdown in growth is likely in the May core food CPI (excluding fresh food and alcoholic beverages).
We forecast the Tokyo area core CPI for June will come in at -0.5% y-y, the same as in May. We expect the core CPI and the core food CPI to contribute to slower core CPI inflation and energy to contribute to an acceleration, with these contributions cancelling each other out. We look for the Tokyo area core CPI for June to come in at +0.4% y-y, versus +0.5% in May.
The disappearance of yen depreciation effects is likely to result in a slowdown in inflation, mainly for durable goods. The disappearance of weak yen effects is also likely to affect food prices, and we think there will be a slowdown in the core food CPI for June. Meanwhile, based on electricity and gas charges and gasoline prices, we expect to see a narrowing in the decline in the energy CPI in June.”
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