Japan – May CPI

The acceleration in inflation of the last few months stalled in May, with both core and headline unchanged. The leading indicators aren't yet suggesting a re-acceleration, with a softening of commodity prices offsetting the weakness of the JPY.

The national rate of CPI inflation was unchanged in May at 2.5% YoY for all items, and 0.8% for core. That reflected a slowdown in the MoM rate to 0.3%, the softest outturn since January.

This is consistent with some leading indicators, which had suggested a weakening of inflationary momentum. Despite the depreciation of the JPY during June, it doesn't yet look like CPI pressures are building up again. We'll find out more in the next few days, with inflation expectations in the consumer confidence survey, the BOJ's calculations of underlying inflation, and the Q2 Tankan.