Japan’s consumer inflation extends fall for 8th straight month, BoJ expects it to drop further

The consumer inflation in Japan extended it fall for the eight consecutive month this year, declining for the longest streak since 2011 amid the Bank of Japan’s expectations for the crucial indicator to drop further in the fiscal year through March next year.

Japan’s consumer prices, excluding fresh food, fell 0.4 percent year-over-year in October, following a 0.5 percent decline in September, data released by the Ministry of Internal Affairs and Communications showed Friday.

However, the overall consumer price index edged up 0.1 percent annually in October, reversing a 0.5 percent decrease in the previous month. It was the first increase in seven months. Also, core consumer prices, which exclude energy and food, rose 0.2 percent on year, after remaining flat in the preceding month.

In addition, fresh food prices jumped 11.4 percent in October due to typhoons and poor summer weather. This contributed almost 0.5 percentage point to the rise in overall CPI. However, energy costs dropped 7.9 percent , dragging down inflation by almost 0.6 percentage point.

Core prices fell 0.4 percent in November in Tokyo as forecasted, whereas, overall CPI rose 0.5 percent and was unchanged when you exclude food and energy costs. The BoJ expects prices to drop 0.1 percent through March 2017, instead of a 2.1 percent gain forecast in April 2014.

However, the victory of Republican Donald Trump as the President-elect of the US, has created inflationary pressure over the Japanese economy, by weakening the yen, while also boosting corporate earnings in the country.

Meanwhile, the USD/JPY currency pair rose to an 8-month high, rising 0.08 percent to 113.38, following the release of the data, while at 6:00GMT, the FxWirePro's Hourly Yen Strength Index remained neutral at -72.10 (higher than the -75 benchmark for bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex