Japan Inflation Slows More Than Expected; Industrial Output Falls Unexpectedly

Japan Inflation 122614

Japan's consumer prices inflation slowed more than expected on lower oil prices in November and industrial production declined unexpectedly from the prior month, official data showed Friday.

Consumer prices rose 2.4 percent year-over-year in November following the 2.9 percent growth in the previous month, figures from the Ministry of Internal Affairs and Communication said. This was slower than the 2.5 percent increase expected by economists.

On a month-over-month basis, consumer prices dropped at a slightly faster rate of 0.4 percent after the 0.3 percent decline in October.

Consumer price inflation, excluding fresh food, slowed to 2.7 percent annually from 2.9 percent in the previous month, in line with the consensus estimate. This was the lowest rate since March, when prices rose 1.3 percent.

On a sequential basis, prices dropped 0.2 percent after the 0.1 percent rise in October.

Among the sub-components, prices of fuel, light and water increased the most, by 4.9 percent. Goods prices rose 3.2 percent and service costs advanced 1.7 percent in November.

Overall consumer prices in the Tokyo region, considered a leading indicator for the nationwide trend, increased at a stable rate of 2.1 percent year-on-year in December, in line with the economists' forecast.

On a month-over-month basis, consumer prices in Tokyo remained unchanged after the 0.4 percent drop in November.

The Ministry of Internal Affairs and Communications also released unemployment and household consumption data for Japan.

The unemployment rate in Japan remained stable as expected at 3.5 percent in November.

The job-to-applicant ratio was 1.1 in November, matching forecasts and unchanged from the previous month. The participation rate decreased 0.3 percentage points over the year to 59.4 percent in November.

Household spending declined 2.5 percent year-on-year in November, slower than the 3.6 percent fall expected by economists. This followed a 4 percent drop in October.

Japan's Ministry of Economy, Trade and Industry released its industrial production, retail sales and wages reports today.

Industrial production declined by 0.6 percent month-over-month in November, defying expectations for a 0.8 percent increase. This followed a 0.4 percent rise in the previous month. This was the first decline in three months.

Nonetheless, manufacturers expect production to increase 3.2 percent in December and 5.7 percent in January.

Retail sales rose 0.4 percent year-on-year in November, less than the 1.1 percent growth expected by economists. In October, sales had advanced 1.4 percent.

Japanese wages declined at the fastest pace in almost five years in November. Real earnings slid 4.3 percent annually, which was also the 17th straight month of decrease, the Ministry of Health, Labor and Welfare reported.

The total labor cash earnings fell 1.5 percent in November from last year following the 0.2 percent rise in October. Economists had expected a 0.4 percent increase in wages. This was the first annual fall in nine months.

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