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27 Mar 2015
Drop in BOJ preferred inflation gauge expected - Capital Economics
FXStreet (Bali) - Marcel Thieliant, Economist at Capital Economics, expects a drop in the BOJ preferred inflation gauge, which excludes fresh food, from 2.2% to 2.1%, adding that it should increase the pressure on the BoJ to ease further.
Key Quotes
"A small rebound in fresh food and gasoline prices should have kept headline inflation unchanged at 2.4% y/y. However, we have pencilled in a drop in the Bank of Japan’s preferred inflation gauge, which excludes fresh food, from 2.2% to 2.1%. If we are right, the pressure on the BoJ to step up the pace of easing should only intensify, especially as the drag from energy prices is set to pick up in coming months."
"Meanwhile, the small rise in gasoline prices last month is likely to have contributed to an increase in retail sales values. Our best guess is a 0.3% m/m rise in February following January’s 1.9% m/m plunge. This would probably inspire favourable commentary, even though sales would have been little changed in volume terms and therefore would still suggest that consumer spending remains sluggish."
"Finally, we expect the jobless rate to fall from 3.6% in January to 3.5% in February. While we think the job-to-applicant ratio probably flatlined last month, this could still be consistent with further drops in unemployment in coming months. (All data are due at 23.30 GMT on Thursday)."
Key Quotes
"A small rebound in fresh food and gasoline prices should have kept headline inflation unchanged at 2.4% y/y. However, we have pencilled in a drop in the Bank of Japan’s preferred inflation gauge, which excludes fresh food, from 2.2% to 2.1%. If we are right, the pressure on the BoJ to step up the pace of easing should only intensify, especially as the drag from energy prices is set to pick up in coming months."
"Meanwhile, the small rise in gasoline prices last month is likely to have contributed to an increase in retail sales values. Our best guess is a 0.3% m/m rise in February following January’s 1.9% m/m plunge. This would probably inspire favourable commentary, even though sales would have been little changed in volume terms and therefore would still suggest that consumer spending remains sluggish."
"Finally, we expect the jobless rate to fall from 3.6% in January to 3.5% in February. While we think the job-to-applicant ratio probably flatlined last month, this could still be consistent with further drops in unemployment in coming months. (All data are due at 23.30 GMT on Thursday)."