— Japan June Core CPI -0.2% Y/Y Under New 2010 Base Year
— Japan June Core CPI Revised Down From +0.4%
— Japan May Core CPI -0.1% Y/Y After Revamp, Previous +0.6%
— Japan June Total CPI -0.4% Y/Y, Revised Down From +0.2%
— Japan May Total CPI -0.4% Y/Y, Revised Down From +0.3%
— Japan Jan-Jun Average Core CPI -0.5% Y/Y Under New 2010 Base Year
— Japan Jan-Jun Average Core CPI +0.2% Y/Y Under 2005 Base Year
TOKYO (MNI) – The year-on-year change in Japan’s core CPI was
pushed down by 0.7 percentage point on average in the January-June
period under the newly revised CPI formula, data from the Ministry of
Internal Affairs and Communications showed on Friday.
The CPI formula revision pushed Japan back into technical
deflation, though barely so.
In order to correct an upward bias that the fixed index tends to
show as time passes from the base year, the government updates the CPI
base year every five years, this time from 2005 to 2010.
It is also shuffling the product basket used in calculating CPI and
the weightings of goods and services in the basket to reflect
preferences for high-tech goods and diversifying lifestyles in a
fast-aging society.
Market participants were closely watching the revamp of the data as
the revision five years ago caused market gyrations. The revision at
that time pushed down the core CPI annual rate by 0.5 percentage point,
much larger than the market consensus for a 0.2-point drop.
Core CPI, which excludes fresh food but includes energy, fell 0.5%
on average from a year earlier in the first six months of 2011 under the
new formula, down from +0.2% y/y under the 2005 base year.
In June, core CPI fell 0.2% on year under the 2010 base year and
product basket, revised down from +0.4% under the previous formula.
Under the 2010 base year, the government is giving a significantly
larger weighting to consumer electronics in the basket of goods and
services used for calculating CPI.
For instance, the weighting allocated to televisions will be 97
against the basket total of 10,000 in the 2010 base year, up from 37
under the formula fixed to 2005 price levels.
Air conditioners will also get a bigger share of 36 out of 10,000,
up from 20, while the weighting for refrigerators will rise to 21 from
17.
Meanwhile, the weighting of high school tuition will fall sharply
to 23 against 10,000 under the 2010 base year, down from 79.
The government will release the July national and August central
Tokyo CPI under the new formula at 0830 JST on Aug. 26 (2330 GMT on Aug.
25).
Year-on-year changes in Japan’s core CPI (%):
Under 2005 Base Year Under 2010 Base Year
Jan -0.2 -0.8
Feb -0.3 -0.8
Mar -0.1 -0.7
Apr +0.6 -0.2
May +0.6 -0.1
Jun +0.4 -0.2
————————————————
Avg +0.2 -0.5
tokyo@marketnews.com
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