Japan - April Tokyo CPI

Overall CPI inflation in Tokyo rose to 2.5% YoY in April. The measure of all items less food, which is the official target for the BOJ, reached 1.9% YoY, which excluding the sales-tax boosted inflation of 2014, was the highest in several decades.

A lot of this reflects rising energy prices, a trend which more recently has started to fade. But core CPI (inflation excluding food and energy prices) in the capital also rose more quickly, from -0.4% YoY in March to +0.7% in April. That came on the passing of the anniversary of last year's cuts in mobile phone charges. In the capital, mobile phone service price deflation eased from the -50% YoY of recent months to -22.5% in April. The same sort of change will be seen in the national data when they are released May 20th.

The cut in mobile phone charges is just one of the distortions that have afflicted official CPI data the last couple of years. Others include the sales tax hike (the latest of which was introduced just before the Covid-19 pandemic hit), and travel subsidies used to try to offset some of the negative impact of the pandemic on the economy.

Given these distortions, it has made more sense recently to use the BOJ's trimmed mean CPI measure to reveal underlying inflation trends. At 1.1% YoY in March, that is already running at the fastest since 2008. In this regard, the jump in Tokyo inflation doesn't tell us much new about inflation in Japan. It is more interesting for showing the catch-up to the trends shown by the trimmed mean figure to be expected when the national data are released in a few weeks time.