Japan's Core CPI excludes fresh food, making it different from the U.S. core definition. It is the BOJ's main monthly reference for judging whether inflation is becoming sustainable.
What to Check First
- Core vs core-core: whether inflation is driven by energy or broader services
- Wage link: whether labor costs are passing through to prices
- Persistence: whether inflation stays near target without one-off import shocks
Reading the Signal
A firm Core CPI print matters most when it is backed by services prices and wage growth. If the strength comes mainly from imported energy or yen weakness, the BOJ may treat it more cautiously. Core-core CPI helps confirm whether demand-driven inflation is present.
Market Impact
Strong Core CPI supports BOJ normalization, yen strength, and higher JGB yields. Weak Core CPI can delay hikes and weaken the yen, while supporting equities through easier financial conditions.