Core Inflation Rate YoY

Japan Core Inflation Rate YoY tracks yearly price change in household goods and services excluding fresh food (fish vegetables and fruits). It is part of the Consumer Price Index (a monthly gauge of purchase prices) from the Statistics Bureau of Japan (the national statistics office). Calculation started in August 1946 and has used retail prices since 1952. Coverage spans goods and services bought by households nationwide with base year (reference year) spending patterns held fixed and the base year equals 100. It excludes direct taxes and housing purchases while owner housing enters via imputed rent (estimated homeowner rent) and energy stays included unlike United States core.

Collectors price standard items Wednesday Thursday or Friday of the week including the 12th. Fresh items are priced three times in weeks including the 5th 12th and 22nd. National prior month and Tokyo Ku area preliminary current month appear at 8:30 AM Japan time Friday of the weeks including the 19th and 26th. Results appear with group indices online with no routine monthly revision. The base (reference year) is reviewed every 5 years with old and new bases linked. The index serves as an economic thermometer assessed against the Bank of Japan 2% price stability target.

Core moves with household goods and services while fresh food stays out and energy stays in. It covers 10 major groups and weights below are the 2020 base example.

• Energy, 7.12% (weight 712 out of 10000): average of electricity gas manufactured and piped liquefied propane kerosene and gasoline.
• Fresh food, 3.96% (weight 396 out of 10000): average of fresh fish and seafood fresh vegetables and fresh fruits removed for weather driven volatility.
• Housing: rent and imputed rent (estimated homeowner rent) tied to surveyed private rents.
• Transportation and communication: household spending on transport and communication goods and services.
• Food: household food spending with fresh fish vegetables and fruits stripped out for core.
• Fuel light and water charges: household spending on fuel light and water services including energy items.

Core covers 9604 out of 10000 and core core covers 8892 out of 10000 (88.92%). The October 2022 release published 18 November 2022 showed all items at 103.7 up 3.7% and core at 103.4 up 3.6%. All items less fresh food and energy stood at 101.7 up 2.5% while energy rose 15.2% and contributed 1.18 points to all items. The 1.1 point gap between core and core core showed energy driving headline strength while underlying inflation stayed softer.

1. Fixed basket (Laspeyres formula): Compare each item price to its base year (reference year) price and weight by base year spending. Fresh food uses monthly weights while other items use fixed annual weights.
2. Aggregation: Average item relatives (price ratios) across municipalities with local weights then average items by spending weights to all items. The 2020 base used 582 items and 167 municipalities. Weights come from spending surveys of about 9000 households.
3. Core derivation: Remove fresh food by weight using core equals all items times all weight minus fresh index times fresh weight divided by rest. For example with base spending 10000 including 396 fresh food a 110.0 fresh relative and 104.0 rest give all items 104.2 and core 104.0.
4. Year on year rate: Divide the current month index minus the same month prior year index by the prior index and multiply by 100. For example core 104.0 versus 100.0 a year earlier equals 4.0% using unrounded indices rounded to 1 decimal place.
5. Contributions and seasonal adjustment: Contributions (shares of change) use unrounded indices to 2 decimal places with a special monthly formula for fresh food. Seasonal patterns are removed using X 12 ARIMA (a Census Bureau method) on data from January 2010 for 5 groupings with yearly recalculation.