Japan all-item CPI slowed to 0.5% yoy in July, down from 0.7% yoy and missed expectation of 0.6% yoy. Core CPI (ex-fresh food) was unchanged at 0.6% yoy, matched expectations. Core-core CPI (ex-fresh food, energy) rose to 0.6% yoy, up from 0.5% yoy and beat expectation of 0.5% yoy.

The core CPI reading remained well below BoJ’s 2% target and was stuck at the lowest level since July 2017. The data clearly showed that BoJ remains well behind is its efforts to boost inflation. While Japan is in no sense in deflation for now, it’s just a matter of time when BoJ would finally admits that momentum in price is gone.

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