Japan’s Tokyo CPI slowed in August as government fuel subsidies pushed down utility bills, but stubborn food inflation kept underlying price pressures elevated. Core CPI excluding fresh food eased to 2.5% yoy from 2.9% yoy, below expectations of 2.6% yoy. Headline CPI also cooled to 2.6% yoy, while the narrower core measure excluding both food and energy edged down to 3.0% yoy from 3.1% yoy.
Food inflation, however, remained sticky. Prices of rice, coffee beans and other groceries kept food CPI ex-fresh food at 7.4% yoy, unchanged from the previous month, highlighting persistent pressure on household budgets.
On the activity side, July industrial production dropped -1.6% mom, worse than forecasts of -1.0% mom, dragged down by a -6.7% mom slump in auto output. Manufacturers expect a rebound of 2.8% mom in August before a modest -0.3% mom dip in September.
Retail sales disappointed, rising only 0.3% yoy against expectations of 1.8% yoy. The labor market was a bright spot, with unemployment falling to from 2.5% to 2.3%, the lowest since December 2019.
