Japan Consumer Price Index:

 https://mainichi.jp/english/articles/20210122/p2g/00m/0bu/038000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices dropped 1.0 percent in December from a year earlier, the steepest fall in over 10 years, due largely to lower energy prices and the government's travel subsidy campaign amid the coronavirus pandemic, official data showed Friday.

Nationwide core consumer prices, excluding volatile fresh food items, logged the largest drop since a 1.1 percent fall in September 2010 and declined for the fifth straight month, according the Ministry of Internal Affairs and Communications. The core consumer price index fell 0.9 percent in November.

In 2020, the core CPI dipped 0.2 percent on average, marking the first decrease in four years and remaining far below the Bank of Japan's 2 percent inflation target.

Ideas:

The core consumer price index can be very complex to see how it might actually affect the "real word" of an economy, as it can include many different areas and sectors.

The idea of lower energy prices might be that suppliers, when there is a rise in oil prices, might "pass on" the higher oil prices to their customers, but when the prices remain low, then maybe the customers of the suppliers also will see lower prices.

The idea of lower prices of course can be b both a positive and a negative. It can be a positive and negative to the suppliers as maybe they don't have to pay higher prices for the supply and then maybe a negative as they don't get or charge a higher price to their customers.

Of course the customers are happy that they don't have to pay a higher price for the oil.

Fresh food prices can be very volatile, meaning prices can change easily a lot depending on variables such as weather, the growing season, the supply available and so on.

Once again the Bank of Japan is kind of focused on the 2 percent inflation rate, while it should be focused on keeping or helping people keep their jobs and not focus or worry about the 2 percent inflation rate until the economy back to normal after the pandemic is finished.

Article:

BOJ Governor Haruhiko Kuroda on Thursday shrugged off concerns that the Japanese economy could slip into deflation.

"Recent falls in the CPI are temporary as they have resulted from lower crude oil prices and the travel subsidy program," he told a press conference following the central bank's two-day policy meeting, adding that the risk of deflation is "not high."

"The yearly fall is largely attributed to lower crude oil prices amid the global coronavirus pandemic and the government's free preschool education program launched in October 2019," a ministry official said.

Ideas:

Yes the CPI can be very cyclical and or cycles related to what is called the "business cycle", meaning the economy always goes temporary period of ups and downs.

Yes there are many factors that might affect prices and even deflation, as deflation is always on the Bank of Japan's area of concern.

And of course, in many cases, central banks globally try to communicate a positive tone as a way to show confidence in the economy.

Because if they too negative in their communication about the economy, then there is the potential for stock markets, not just in Japan but globally to react negatively.

For example, what happens on the NYSE, the New York Stock Exchange can have direct affect with the Japanese stock market, whether positive or negative related to the NYSE the same thing will happen globally.

Article:

In December, electricity and gas bills fell 7.9 percent and 9.5 percent, respectively, reflecting lower energy prices in the first half of 2020.

Gasoline prices lost 8.9 percent due to falling crude oil prices in the reporting month, while prices for kerosene products dived 14.4 percent.

Accommodation fees plunged 33.5 percent from the previous year due to the "Go To Travel" subsidy program, the government's bid to revive the domestic tourism industry hit hard by the pandemic.

Ideas:

Exactly! The overall decrease in oil prices is seen across the board relate to business consumers or family consumers having to pay lower prices.

Of course may oil company suppliers might not be happy, but at the same time, they might be able to make up for it with consumer actually using more, as the price of electricity and gas is lower, meaning maybe they will use the electricity and gas more than usual, when the prices are higher, for the consumers, they might actually cut back on their use.

Supposedly the "Go to Travel" program pay as subsidy to either the travelers or the hotels as an incentive to increase domestic tourism.

Of course the idea was good idea to stimulate domestic tourism but no one expected an increase in the pandemic situation or a big of an increase.

Article:

The survey was conducted Dec. 4 and 5, before Prime Minister Yoshihide Suga halted the nationwide travel campaign in late December due to a resurgence of virus infections across Japan. The program effectively lowered the CPI by 0.4 percentage point in the month, the official said.

"Weak consumption in the services sector put pressure on overall prices, as people refrained from traveling and having parties in the year-end and New Year holidays following a resurgence of virus infections," said Takeshi Minami, chief economist at the Norinchukin Research Institute.

"COVID-19 vaccinations could revive demand if proven to be effective, but it remains unclear whether consumption will recover to the pre-pandemic level," he added.

So-called core-core consumer prices, which exclude fresh food and energy items, dropped 0.4 percent in December from a year before, marking the third straight month of decline.

Ideas:

The services sector, of course, has been affected the most by the virus situation. Anything from restaurants, travel companies, airlines, hotels, etc all have been heavily affected along the thousand and thousands of small businesses in the service sector.

The Bank of Japan and the Japanese government needs to and do focus on helping as many businesses as they can, and of course the are trying to do it.

And of course this is not the time to "let the market" decide the fate of all the businesses that are affected by the virus situation.

Have a nice day and be safe!