Japan: Encouraging Tokyo CPI in July - ING

Rob Carnell, Chief Economist at ING, explains that encouraging Tokyo CPI in July is a hopeful sign that Abe and Kuroda’s efforts to achieve 2% inflation target are at least dragging inflation in the desired direction.

Key Quotes

“Japanese data today is all more or less in line with market expectations, though there was a slightly better outcome for the Tokyo August CPI release, which came in at 0.5% YoY, up from 0.2% YoY (itself revised up from 0.1% YoY), and Tokyo core inflation was also a tenth higher than expected at 0.4% YoY. Although only marginal overshoots on expectations, the slow grinding rise in Tokyo inflation, which is released with a one month lead on the national figures, is encouraging.”

“The 2% inflation target remains, as it always was, a hugely overoptimistic and not very credible goal. But Abe and Kuroda’s efforts to achieve it are at least dragging inflation in the desired direction, and as such, their efforts are unlikely to be slackened any time soon.”