Bankinter : January CPI in Japan reaches +2.2% year-on-year vs. +1.9% expected and +2.6% previous. Underlying: +3.5% vs. +3.3% expected and +3.7% previously.
Analysis: The price indicator decelerates for the third consecutive month, although it defies expectations in both readings. This slowdown is mostly due to a mirror effect in energy prices (-12.1% year-on-year). Since, after the strong rebound in energy, as of February 2023, the government implemented subsidies to this component. Faced with an economy in technical recession (GDP: -0.1% year-on-year in Q4 and -0.8% in Q3), a weak yen and possible additional inflationary pressures from negotiated wages (Shunto), the data plays in favour of a BoJ that is abandoning its ultra-loose monetary policy.
