Analysts at Nomura notes that the Tokyo core CPI (all items, ex fresh food) for August 2018 was up 0.9% y-y, 0.1ppt higher than the July inflation reading and above the market consensus forecast (Bloomberg survey median) of 0.8%.
Key Quotes
“The BOJ’s version of core CPI inflation (which excludes fresh food and energy) for Tokyo was up 0.6% in August, 0.1ppt higher than the reading in July.”
“The main factors behind the rise in core inflation were a 0.14ppt m-m boost to core inflation from accommodation prices and a 0.06ppt boost from telecom fees (mobile phones). Core foods (food ex-fresh food and alcoholic beverages) also boosted core inflation by a total of 0.03ppt versus the previous month. That said, there does not look to have been much to push up inflation other than these items.”
“The main factor pushing up inflation this time around was accommodation prices, a factor which has a tendency to distort inflation readings due to its high volatility. While Tokyo CPI was up substantially in August, we believe it is important to remain cautious regarding a possible downswing from next month as Tokyo CPI tends to rise in August when many people have summer holidays.”
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