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What to expect from this week's Japanese inflation? - RBS

FXStreet (Bali) - RBS FX Strategists shares their view on the upcoming Japanese inflation data, noting that the figures may take on added importance this time around.

Key Quotes

"National CPI is released for Japan, and we expect the core rate (excluding fresh food) to slip from 3.3% y/y to 3.2%, matching the consensus. To be sure, the inflation figures may take on added importance after media sources reported Prime Minister Abe will be watching the impact of the weaker JPY on the economy. The pace of price inflation has not slowed as much as our economists anticipated in response to the consumption tax hike, and we see companies as more willing to pass through tax hikes to consumers."

"These developments, combined with recent JPY weakness, has led our economics team to revise up their inflation forecasts despite recent economic weakness. As a result, we do not feel the BoJ will be “forced” to lower its outlook for inflation in the October Outlook Report. That leaves the risk of additional easing low for the time being."

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