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🇯🇵❗️Cable FX Macro Weekly Note: Japan September Consumer Prices

**As seen in Risk In The Week report 10/13/23, subscribe at

August consumer prices eased to 3.2% Y/y from the prior 3.3%, this was higher than the survey median of 3.0%. The metric excluding more volatile items printed unchanged from the prior at 2.7% Y/y, and CPI excluding fresh food came in at 3.0% Y/y vs the median estimate of 3.0%. More recently, September Tokyo CPI saw a moderate easing to 2.8% Y/y from the prior 2.9%, however, this was above expectations of 2.7%. Tokyo September food prices rose 8.8% Y/y from the prior 8.2%, the fresh food component jumped to the highest since 2010 at 10.3% Y/y. The broad prices metric is in line with the prior deflationary trend and the core figure eased from August, this is likely to put off some pressure on the BoJ to normalize policy soon. A recent survey compiled by Bloomberg showed economists expecting Japan's national inflation to move back below 2.0% by the end of 2024, the core figure is seen at 2.1%. A recent report from Kyodo said the BoJ is considering raising the FY 2023 price outlook to 3.0% from a prior 2.5%, this was a bit supportive of tightening expectations. The desk at MUFG sees headline CPI slowing to the slowest pace since September 2022, lower energy prices reinforce their view, however, they warned that the core metric has likely peaked. MUFG has recently revised its base case scenario on Japan's monetary policy, they expect the BoJ to remove both YCC and NIRP by January 2024. Their expectations derive from the BoJ’s confidence to achieve a positive income-spending cycle mechanism and a virtuous cycle between wages and prices.



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