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Analysts at Nomura point out that the August 2018 all-Japan core CPI (all items less fresh food) rose by 0.9% y-y, 0.1ppt higher than the rise in July, and in keeping with the consensus forecast (Bloomberg survey median).

Key Quotes

“The breakdown shows a notable contribution from accommodation prices, which bolstered the core inflation rate by 0.11ppt. Accommodation prices are an item that has a tendency to distort inflation readings due to its high volatility.”

“In August accommodation prices bolstered the core inflation rate substantially, but there could be a reactive decline from September. Moreover, the boost to inflation was confined to a few items, and given that there was no notable contribution from many items, we do not think that the underlying inflation rate has moved onto an upward trajectory at this stage.”