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Analysts at Nomura note that the Tokyo core CPI (all items ex fresh food) for September 2018 was up 1.0% y-y.

Key Quotes

“The rise in core CPI was 0.1ppt higher than the August inflation reading, and came in above the median Bloomberg consensus forecast of a rise of 0.9%. The BOJ’s preferred measure of core-core inflation (which excludes fresh food and energy) showed prices in Tokyo to be up 0.7% y-y in September, for a rise 0.1ppt steeper than that in August.”

“Setting aside the more volatile categories, higher prices across a wide range of goods contributed to higher inflation in Tokyo in September.”

“Beginning in the spring of 2018, the core inflation rate edged downward, pulled down in particular by lower prices for home appliances and other consumer durables. Prices for final goods / consumer durables in the corporate goods price index (CGPI), after falling by 2.1% y-y in July, fell by a smaller 1.7% in August (the most recent month for which data is available), and we have been expecting consumer durables to similarly drive an eventual pick-up in CPI as well. The September data suggests that inflation has begun picking up a little sooner than we had anticipated.”