Japan CPI core (all items ex-fresh food), slowed to 0.3% yoy in September, down from 0.5% yoy, matched expectation of 0.3% yoy. That’s also the lowest level in more than two years since April 2017, and drifted further away from BoJ’s 2% target. All items CPI slowed to 0.2% yoy, down from 0.3% yoy and matched expectations. CPI core-core (all items ex-fresh food and energy) slowed to 0.5% yoy, down form 0.6% yoy, matched expectation but remained sluggish.
Japan Finance minister Taro Aso said yesterday that the government was ready to ramp up stimulus to guard against risks from slowing global growth and US-China trade tensions. He said after a meeting of G20 finance leaders, “Given uncertainty over the global economy, exports are falling and weighing on manufacturers’ output. But the weakness has yet to spread to non-manufacturers or domestic demand.
Ado added, “if we need to compile some form of an economic stimulus package, we are ready to take various types of fiscal measures flexibly”. He also emphasized that “When you look back at the problems Japan faced, including deflation, they can’t be fixed by monetary policy alone. You need a coordinated monetary and fiscal response.”
Separately, the good news is that the government estimated the US-Japan trade deal will boost Japan’s economy by 0.8%. There will be around JPY 4T contribution to GDP based on its fiscal 2018 figures. Also, the deal will create around 280k jobs.
