Japan Economics_ Signs of Upturn in Underlying Inflation, Though Services Still Stable (Sep 2024 Nationwide CPI)

Summary of Key Points from the Conference Call Industry Overview - Industry: Japan's Economic Landscape - Focus: Inflation trends, Consumer Price Index (CPI), and service prices Core Insights 1. Signs of Upturn in Underlying Inflation: - Weighted median CPI increased to 0.8% YoY in September from 0.7% YoY in August, indicating a positive margin for the first time in three months [1] - The share of items in the CPI with increased price indices likely rose for the first time in five months [1] 2. Goods vs. Services Prices: - Goods prices remain solid, while service prices excluding restaurants are stable [1] - Japan-style core CPI (excluding fresh foods) slowed to 2.4% YoY from 2.8% in August, primarily due to a temporary drop in energy contributions [1] - Core-core CPI (excluding fresh food and energy) increased to 2.1% YoY from 2.0% YoY in August, driven by a 44.7% YoY surge in rice prices [1] 3. CPI Services Outlook: - CPI services will be crucial in the upcoming October report [1] - The import price index fell by 2.6% YoY in September, breaking a seven-month rise [1] 4. Corporate Service Prices: - Corporate service prices are trending in the upper-2% range, with expectations that higher wages will increase upward pressure on CPI services [2] - Companies are likely to revise service prices in October, marking the start of the fiscal year's second half [2] 5. Impact of Energy Subsidies: - The extension of energy subsidies is seen as a positive factor for consumption [2] Additional Important Points - Consumer Behavior: - Some firms, such as beef bowl chains and major supermarkets, have begun discounting prices, indicating a lag in private services passing on higher costs relative to wage increases [2] - Market Sentiment: - The Bank of Japan (BoJ) is focusing on whether companies will transfer their wage burdens onto service prices starting in October [2] - Future Projections: - The upcoming CPI release is anticipated to provide further insights into inflation trends and consumer behavior [1][2] This summary encapsulates the key points discussed in the conference call regarding Japan's economic indicators, particularly focusing on inflation and consumer price trends.