Inflation remained unchanged at 0.3% in November
With an increase in food prices by 2.9%, Japan’s CPI (consumer price index) remained relatively unchanged on a YoY (year-over-year) basis in November, recording the same increase of 0.3% seen in October 2015. Consumer prices fell 0.3% month-over-month, following a 0.1% drop in October.
With inflation staying low, the WisdomTree Japan Hedged Equity Fund (DXJ) and the iShares MSCI Japan ETF (EWJ) fell 1.3% and 1.2%, respectively, on December 24. Toyota Motor Corporation (TM), Mitsubishi UFJ Financial Group (MTU), and SoftBank Group Corporation (SFTBY) fell 1.1%, 0.16%, and 0.43%, respectively, on December 24.
Decline in fuel, light, and water charges kept inflation low
In addition to the rise in food prices, culture and recreation prices rose by 2.5%, furniture and household utensils prices rose by 2.5%, clothes and footwear prices rose by 1.8%, and education prices rose by 1.5%. However, the 6.8% decline in fuel, light, and water charges and the 2.8% decrease in transportation and communication prices over the past year have contributed to keeping inflation low.
Inflation remained low in November with a decline in energy prices. However, the core inflation rate, which excludes the volatile fresh food basket, increased to 0.1% YoY. Also, the core-core inflation rate, which includes all items except food and energy, rose by 0.9% on an annual basis, as compared to an increase of 0.7% in October 2015.
The target inflation rate set by the Bank of Japan, or BOJ, stands at 2.0%. November’s inflation was far below the target inflation rate. To boost economic growth and help the economy overcome deflation, the BOJ kept its pledge to increase the monetary base at an annual pace of about 80 trillion yen, according to minutes from the BOJ’s December 2015 meeting.
In the next part of this series, we’ll take a look at Japanese household income and spending.