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EnglishپارسیEnglishپارسیKEY FIGURES
CPI Tokyo Ex Food & Energy YoY (Jul): 1.7% (prev: 1.8%)
Tokyo Core CPI YoY (Jul): 2.9% (est: 3.0%; prev: 3.1%)
Tokyo CPI YoY (Jul): 2.9% (prev: 3.1%)
CPI Tokyo Ex Food & Energy MoM (Jul): 0.1% (prev: –0.4%)
Corporate Services Price Index YoY (Jul): 3.2% (est: 3.2%; prev: 3.4%)
WHAT IT MEANS
Inflation pressures in Tokyo eased modestly in July, with ex‑food & energy CPI dipping to 1.7% YoY and registering a slight monthly gain, while both headline and core CPI slowed from last month’s readings, pointing to softer consumer‑price momentum.
MARKET REACTION
Japanese government bond yields slipped slightly, and the yen was little changed against the dollar as markets digested the softer‑than‑expected inflation readings.
OUTLOOK
Investors will look to next month’s national CPI data and Bank of Japan commentary for further clues on whether the central bank will maintain its accommodative policy stance or signal adjustments.
Japan’s economy showed mixed signals in July, with the manufacturing sector contracting while services remained in expansion, according to au Jibun Bank’s flash PMI data.
🔹 Key Data:
📊 What it Means:
The manufacturing index fell below the 50 threshold, indicating contraction amid weaker orders and production. However, service activity remained robust, driven by domestic demand and tourism.
Japan's BoJ Core CPI (which excludes fresh food and energy) rose 2.3% YoY in the latest reading, down from the previous 2.5%, and below market expectations.
📉 What it Means:
The modest decline in core inflation could ease pressure on the Bank of Japan to tighten policy further, reinforcing expectations for a cautious stance amid fragile domestic demand.
Japan’s national inflation cooled in June across all key metrics, signaling easing price pressures and reducing urgency for the Bank of Japan to tighten monetary policy.
🔹 Key Data:
📉 What it Means:
The consistent slowdown in headline and core inflation suggests that price momentum is fading, which may give the BOJ more room to maintain accommodative policies as it balances inflation management with fragile growth.
Japan’s trade balance improved in June, posting a surprise surplus, as imports returned to growth and exports contracted less than expected. Meanwhile, foreign investment in Japanese assets remained strong.
🔹 Key Data:
📈 What it Means:
Japan returned to a trade surplus in June as import growth outpaced a modest export decline. Although foreign inflows into Japanese bonds and equities declined from previous highs, demand remains robust. The data may ease some pressure on the yen and support cautious optimism for external demand recovery.
Japan’s latest set of high-frequency indicators for May painted a mixed picture of the economy:
Overall, while capacity utilization improved, the broader production and service activity figures show that Japan’s recovery remains uneven, with the services sector showing signs of softness despite marginal stabilization in manufacturing output.
Japan’s core machinery orders—a key leading indicator of capital spending—showed mixed signals in May:
This rebound from April's slump suggests some stabilization in corporate investment appetite, but overall momentum remains cautious amid global uncertainty and yen volatility.
📉 PPI (MoM):
-0.2% — Matches expectations and lower than May's -0.1%, suggesting slowing cost pressures at the producer level.
📊 PPI (YoY):
2.9% — In line with forecasts and a decline from 3.3% in May, indicating a continued cooling in wholesale inflation, which may give the Bank of Japan more flexibility on policy normalization.
📈 Foreign Bonds Buying:
¥1,656.8B — A sharp increase from the previous ¥182.8B, suggesting strong foreign demand for Japanese bonds this week. This may reflect global risk-off sentiment or yield differentials.
📊 Foreign Investments in Japanese Stocks:
¥611.7B, slightly down from the previous ¥651.3B, but still showing consistent foreign interest in Japan’s equity market amid stable economic signals.
Japan’s M2 money stock grew by 0.9% year-over-year in June, notably faster than both the expected 0.2% and the previous 0.6% growth rate. This uptick suggests a modest acceleration in liquidity and potential credit availability in the Japanese economy, possibly reflecting mild monetary expansion or deposit growth.
In addition, the M3 money supply reached 2,204.8 trillion yen, up slightly from the previous month's 2,200.8 trillion yen, indicating continued but moderate broad money growth.
Analysts note the upside surprise suggests consumer sentiment is improving, potentially supported by wage gains and better labor market conditions, but caution that sustained spending growth will require continued real income gains amid still-elevated living costs and weak yen pressures.