🇯🇵 Cable FX Macro Weekly Note: JP May National CPI

**As seen in Risk In The Week report 06/18/2022, cablefxm.co.uk/reports

Japan headline consumer prices breached the 2.0% level for the first time since 2015, April CPI printed in line with the consensus forecast at 2.5% Y/Y. Core consumer prices topped expectations at 2.1% Y/Y, up from the previous 0.8%. The metric excluding fresh food and energy also beat market expectations, recording a 0.8% Y/Y rise. On a monthly basis, headline prices increased by 0.4%, goods jumped by 0.5%, clothing and household goods led the rise. The only declines were seen in medical care and transportation. Strategists at J.P. Morgan note that the 2% BoJ target breach may be a game changer for policymakers. They said that DIs for Japanese companies’ output prices and sales prices have reached levels not seen in 30-years, this suggests that companies may be in a better position to pass through cost increases, they wrote. Strategists note that if companies start raising wages, the BoJ may see this as a sign for policy adjustment. J.P. Morgan highlights risks to this scenario given the possibility of a U.S. recession, a slow economic comeback from China, and easing in wage increases from Japanese companies.