Japanese CPI Overall 2.8% y/y
- expected 2.7%, prior 2.8%
Core CPI (excluding fresh food) 2.7% y/y
- expected 2.7%, prior 2.6%
Core-core 1.9% y/y, first time under 2% since September 2022
- expected 1.9%, prior 2.2%
- excluding fresh food and energy, this is the closest to US core inflation
The Bank of Japan have been very fussy over the type of inflation seen in Japan. Up until now its been due to the weaker yen and higher import costs, which is ‘cost push’ inflation. The Bank of Japan wants to see inflation being dragged higher by rising wages and demand instead. This is ‘demand pull’ inflation and is considered a more stable and sustainable inflation. Which is what the BoJ wants.
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Cost-push inflation and demand-pull inflation are two types of inflation that arise from different economic factors. Here’s a comparison between the two:
Causes:
- Cost-Push Inflation: Cost-push inflation occurs when there is an increase in production costs, such as wages, raw materials, or energy prices. These cost increases lead to a decrease in the supply of goods and services, causing prices to rise.
- Demand-Pull Inflation: Demand-pull inflation occurs when there is an increase in aggregate demand for goods and services. This increase in demand outpaces the economy’s ability to supply goods and services, resulting in upward pressure on prices.
Key Drivers:
- Cost-Push Inflation: The main drivers of cost-push inflation are factors like rising labor costs, increased production costs due to higher commodity prices, or government regulations leading to increased costs for businesses.
- Demand-Pull Inflation: Demand-pull inflation is driven by factors such as increased consumer spending, government spending, investment, or expansionary monetary policies that stimulate aggregate demand beyond the economy’s productive capacity.
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Later:
This article was written by Eamonn Sheridan at www.forexlive.com. Source