Japan CPI:

 https://mainichi.jp/english/articles/20210423/p2g/00m/0bu/050000c

Article:

TOKYO (Kyodo) -- Japan's core consumer prices dipped 0.1 percent in March from a year ago with the pace of decline slowing further, providing relief to the Bank of Japan as it battles to stem coronavirus pandemic-induced price falls, government data showed Friday.

The nationwide core consumer price index, excluding volatile fresh food items, marked the eighth straight month of decline, dragged down by lower energy prices, according to the Ministry of Internal Affairs and Communications. In February, the core CPI was down 0.4 percent.

The pace of decline slowed in March due partly to a rise in prices of household appliances such as air conditioners and air purifiers as demand increased due to people spending more time at home during the pandemic.

Ideas:

Most likely the Japanese CPI will continue to decline throughout the pandemic as consumer are worried about jobs and the future.

But at the same time, maybe the Bank of Japan shouldn't be too concerned with the drop in prices as long as it not too much.

By that I mean, as long as the pandemic continues and some sectors such as services sector is struggling, and people are worried about jobs, most likely consumers are not going to spend like before the pandemic, and the Bank of Japan should focus on helping businesses survive instead of being too concerned with 0.1 drop in the CP.

People and businesses are more important than an index measurement.

Article:

In fiscal 2020 through March, the core CPI dropped 0.4 percent, the sharpest decline in a decade, as the pandemic sent crude oil prices lower and the government's domestic tourism subsidy program brought about significant cuts in accommodation fees.

The figure marked the first fall in four years, according to the ministry data. The BOJ had projected a core CPI decline of 0.5 percent for fiscal 2020, far from its 2 percent inflation target.

"Movements of crude oil prices sway the CPI, but other than that the underlying factor that prices are not on an upward trend remains the same," said Yuichi Kodama, chief economist at Meiji Yasuda Research Institute.

Ideas:

The core CPI or any index needs to be taken with a grain of salt, meaning try not to read too much into a decrease or an increase as there are always many factors involved.

Such as the domestic tourism subsidy. It was meant as a stimulus strategy to help domestic tourism and to help tourism businesses such as hotels.

But the say the subsidy program affected the CPI might not be a good description, as the subsidy program, while lowering prices for tourists and consumers, should have compensated hotels for the decrease in prices. 

So overall, there should not have been no real affect on CPI.

But of course CPI was affected by many factors related to the pandemic especially the decrease in consumer spending as some estimates say up to 50 percent of Japan's GDP is related to consumer spending.

When you have a significant enough of the population not spending and or reducing their spending it can have an affect on overall prices and the CPI.

But what has not been talked about is how much online spending has there been and has it had any real affect on CPI.

Crude oil is a tricky area. There are both positives and negatives to any increase in prices.

While suppliers might like a increase in prices to charge consumers, consumers of course prefer lower prices.

And then there the businesses who might use or need oil for their businesses. They might like lower prices, but those who sell oil would of course prefer higher prices to sell to consumers.

Article:

BOJ Governor Haruhiko Kuroda has brushed aside the possibility that Japan will return to deflation, pointing out that downward pressure on the CPI came largely from special factors including the "Go To Travel" subsidy program.

Still, accelerating inflation is a difficult task for the BOJ, which tweaked its monetary policy in March to prepare for protracted easing.

In March, a 4.8 percent fall in electricity, gas and water bills weighed heavily on the overall CPI, tracking weak crude oil prices with a delay. Electricity bills dropped 7.1 percent while city gas slumped 8.5 percent.

Kerosene prices were down 4.2 percent.

Ideas:

Deflation has been a challenge for the Japanese economy going on 20 plus years.

And again I don't think you can blame the travel subsidy program as it was supposed to supplement hotels and other places related to lower prices for consumers.

The Bank of Japan has maintained a negative interest rate strategy for a long time. Its both a positive and a negatives depending on which side in the economy you are on.

For some banks it might be a negative but for businesses and consumers it might be a positive.

Again lower electricity, gas, and water bills would be a positive for consumers, who have to pay less but of course maybe not a positive for suppliers who would get less.

Perhaps commodity prices should be part of the CPI because of its positive and negative nature.

But if there is no regulation, and its just let the market decide, meaning whatever the market can bear, than maybe leave in it the CPI.

Companies can charge what feel the market can handle and consumers will only try to use what they can afford. 

It that way the market is always in a negotiating position.

Article:

But gasoline prices turned positive for the first time in a year, up 0.9 percent, as crude oil prices have been rising on hopes for global economic recovery as vaccinations against COVID-19 progress.

Accommodation fees were flat from a year ago following sharp year-on-year falls in recent months. A ministry official said some recovery was seen in travel demand after the lifting of a state of emergency over the pandemic for urban areas such as Osaka and Fukuoka on March 1.

In fiscal 2020, accommodation fees tumbled 16.9 percent and kerosene prices plunged 12.6 percent. Among other major decliners, fees for private kindergartens dived 88.5 percent in response to the government's move to make preschool education free, the data showed.

Ideas:

In most situations prices in a market economy are usually always subject to demand and supply factors.

As the global economy began to pick up and vaccinations began to increase perhaps consumer sentiment also improved as the state of emergency was lifted.

Gasoline prices, like most things are related to market factors and or supply cost factors.

As supplier prices increase, sometimes they have no choice to to pass on their costs to the buyers or consumers.

And or if they see an uptick in demand and or an uptick in the overall economy, suppliers will begin to increase prices.

The accommodation industry suffered a two pronged attack; from domestic tourists and then from international tourists. 

Of course the domestic industry will come back much sooner and it might take years before the international tourism segment returns to the pre-pandemic level.

Even the Olympics is not going to help the Japanese tourism industry that much as most if not all the people coming to Japan for the Olympics are not actual tourists, and as the pandemic and the variants are still a problem, even those who do come, such as the officials and the athletes are not going to be allowed any kind of tourism activities.

Article:

The price outlook remains uncertain as a resurgence in coronavirus cases has led to a government plan to impose yet another state of emergency for populous areas with the rescheduled Tokyo Olympics and Paralympics approaching this summer.

Major mobile operators in Japan started to offer lower data usage fees in March, taking heed of strong pressure from the administration of Prime Minister Yoshihide Suga.

The ministry official said the government is paying close attention to the impact of the fee cuts on the CPI that will start to appear in April data.

Ideas:

Back to the idea of the CPI. Again the CPI should be taken with a grain of salt, meaning there are always positives and negatives in an economy and as such an index number should not be a major guiding factor related to what should be done to an increase in overall prices or even a decrease in overall price.

The government wants to have lower fees for consumers from mobile operators. That should be a good thing for consumers who pay too much in Japan for their phone usage.

While it might be not a good thing, at first for mobile operators, they have maybe lived too long on charging consumers high prices and haven't learned to become more efficient or even effective at charging lower prices.

So the mobile operators now have to find ways, if they haven't already, to learn how to be more efficient with the lower prices called for by the government to help consumers.

Perhaps the Bank of Japan has relied too much on the CPI as a monitor of prices in the economy.

Article:

"The fee cuts are expected to drag down the CPI by 0.1 to 0.2 percentage point," Meiji Yasuda's Kodama said. "Price-cutting is unlikely to spread to other sectors so deflation is not in the offing."

So-called core-core consumer prices, excluding fresh food and energy items, rose 0.3 percent in March from a year earlier, up for the third straight month.

Ideas:

Its highly unlikely that the average consumer or even the average business really cares that much about changes in the CPI like the Bank of Japan does.

The average consumer only cares about what he/she can afford to buy and what the prices are. 

They don't look at or care about the CPI.

The same with businesses. They only care about will they business grow, will it survive, do we have customers, are we charging the correct prices for the business to grow and or survive, and are our customers happy.

The BOJ might like to see the CPI changes every month but the average consumer or business doesn't pay attention to it.

So a decrease in the CPI because of government suggested changes in the mobile operator fees should not be that significant.

The BOJ and others focus too much on things that really don't matter.

People's daily lives are important right now as is the survival of businesses during the continued pandemic.

Have a nice day and be safe!