Japan – services PPI ticks up in September
The steady drop in services PPI inflation stabilised in September, with core ticking up to 2.9% YoY. The data aren't good enough to prove the decline is now over, but I do think a floor should be close. Lumpiness in the data suggests a short-term bounce, and the labour market remains tight.
Japan – another noisy month for CPI
National inflation data for September was messy again. One reason was public service prices falling, a development that stands out when a theme of recent BOJ speeches has been pent-up inflation pressure in the public sector. Overall, the inflation picture still looks solid.
Japan – Takata's case for hiking
BOJ board member Takata Hajime yesterday likened the downwards revisions to the BOJ's forecasts on the back of tariffs to a typhoon-linked "planned suspension" of public transport that now needs to be lifted. He also argued inflationary pressure is increasingly being driven by domestic factors.
Japan – Tamura's upside risks
Naoki Tamura's speeches are always clear and interesting. Some of his remarks today overlap with points I've highlighted the last few months: the strength of the Tankan survey and sakura report; repressed inflation in public services prices; the negative impact of inflation on pensioners.
Japan – PPI rising again
In September, even before the renewed JPY depreciation of the last week, PPI inflation rose. By raising import prices, USDJPY back above 150 will mean input price inflation remains stronger for longer. The (relative) hawks at the BOJ will be becoming more convinced that inflation is sustainable.
Japan – hemmed in
With JPY depreciation unpopular and the cycle intact, it is unlikely that the Takaichi administration can really make the BOJ hike even more slowly than it has been. The policy that would work better for defusing the cost of living crisis would be fiscal loosening to raise household incomes.
Japan – wage growth a bit better
One of the data points that challenges the BOJ's confidence on wage-price developments is slowing part-time wage growth. That ticked up in August, as did base pay for full-time workers. By historical standards, both are high, but growth in overall earnings growth continues to trail price inflation.
Japan – neutral Ueda
The main takeaway from Governor Ueda's speech today was that he remains concerned about the impact of tariffs. That isn't unreasonable, and more than today's rise in UE, is a reason to think rate hikes aren't a done deal. However, I still think the Tankan has pushed the BOJ further in that direction
Japan – "underlying" inflation still tacking at 2%+
Inflation indicators in yesterday's summary release of the Tankan were already firm. Today's comprehensive release paints a picture that is stronger still. The implication is that one of the BOJ's older measures of underlying inflation, the trimmed mean, is likely to remain above 2% for the next 6M.