Japan's Core CPI:

 Article Source:  https://mainichi.jp/english/articles/20220506/p2g/00m/0bu/031000c

Article:

TOKYO (Kyodo) -- Core consumer prices in Tokyo increased 1.9 percent in April from a year earlier, the fastest pace in over seven years, accelerated by rises in crude oil and material prices amid Russia's invasion of Ukraine, government data showed Friday.

The core consumer price index excluding volatile fresh food items, seen as an indicator of Japan's CPI, marked the eighth straight month of year-on-year gain and its largest increase since March 2015, the Ministry of Internal Affairs and Communications said in a preliminary report.

The rise, which was close to the Bank of Japan's 2 percent inflation target, also resulted from the waning effect of sharply lower mobile phone fees that began last spring and the yen's sharp depreciation against the U.S. dollar, which pushed up consumer prices via higher import costs.

Ideas:

An increase of 1.9 percent it really not that much overall. But of course for those who have limited incomes it could be a lot depending on what they buy.

But the trend, in Japan and globally, seems to be a constant increase in prices. 

It seems to the type of inflation the Bank of Japan is looking for is not what is happening now. The inflation happening now is related to supplier inflation from increased energy costs and increases raw material cost.

The kind of inflation that the BOJ is looking for in business spending and consumer demand inflation which is not happening because of supplier inflation.

So in reality the BOJ has not reached its goal of 2 percent consumer spending inflation.

Article:

Among energy prices, which jumped 24.6 percent, electricity fees surged 25.8 percent, city gas fees soared 27.6 percent and kerosene prices climbed 21.0 percent.

Food prices also rose due to higher wheat and beef prices, with the price of white bread rising 8.4 percent. Dining prices also increased 1.5 percent.

Prices of durable household goods climbed, including a 21.6 percent increase in refrigerator prices. Accommodation fees gained 6.1 percent.

Ideas:

Energy cost increases and food cost increases are hitting every part of the Japanese economy and society.

Consumers of course see the increase in prices but depending on what they like or what they buy they may or may not feel the effects of the prices increases.

Most likely large companies see the increase in energy costs but most likely are able to ride it out without too much damage.

The same can't be said for small businesses that probably operate on very thin profit margins, and as such any increase in costs might have a huge effect on them.

Again what is happening is not consumer demand inflation which is what the BOJ wants but rather what is happening is supplier inflation which is really not very good for any economy.

Article:

Meanwhile, communication fees for mobile phones plunged 22.5 percent in the reporting month, but the size of the decline contracted from 52.7 percent in March.

Koya Miyamae, a senior economist at SMBC Nikko Securities Inc., said the nationwide CPI for April, set for release on May 20, is also expected to reach around 2 percent, but the current increasing prices are unlikely to affect the BOJ's ultraeasy monetary policy.

"The BOJ is expected to maintain the current stance, as it believes the current rises in prices are temporary," Miyamae said.

Ideas:

Most likely mobile carriers are scaling back their phone fee decreases as they too have to deal with increases in price increases and at the same time, as everyone is focused on other price increases in the economy, they might feel they can get away with less prices decreases at the present time.

The Bank of Japan should maintain is ultraeasy monetary policy for the time being and even into the future and the Q1 results for GDP growth was not so good.

And now add in the price increases and contrary to what is happening in the US and the EU the BOJ should be vigilant as there might be many households and small businesses who are going to be looking for loans to make it through this inflation period.

Increasing the key interest rate at this time might be more of a burden than a benefit to the Japanese economy and society at this time.

Theer is no real way to see if the current price increases are temporary or are they here to stay for awhile.

Either way its not good for consumes or businesses in the short-term or long-term. 

Have a nice day and be safe!