Point-to-Point Inflation Inches Climbs To 6.3% in November

• Consumer prices rose 1.6% in November, the highest monthly rate for the calendar year to date. This upward movement in inflation was influenced mainly by a 9.9% increase in the index for the ‘Transport’ division, given a 19.0% increase in route taxi and hackney carriage fares.
• ‘Water Supply and Miscellaneous Services Relating to the Dwelling’ and ‘Food and Non-Alcoholic Beverages’ were the other notable contributors to inflation in November. Higher sewage and water rates were the primary drivers of the 1.3% increase in the former index. With higher prices for bread, chicken, and agricultural produce, such as tomato, carrot, and green banana, the index for Food and Non-alcoholic beverages rose 1.0%. Given the sharp increase in consumer prices for November, the point-to-point inflation rate was 6.3%, and fiscal year- to-date the inflation rate was 6.7%.
• Despite inflation rising above its target range, on November 21, 2023, the BOJ maintained its policy rate at 7.0% as it continues to monitor the pass-through effects of previous hikes on deposit and loan rates.
• According to the BOJ, inflation is projected to rise above the Bank’s target range of 4.0% to 6.0% between the December 2023 and March 2025 quarters. The projected acceleration in inflation primarily reflects the impact of the announced increases in select public passenger vehicle (PPV) fares in October 2023 and April 2024.
• The forecast also assumes that oil prices will be elevated over the next three quarters (December 2023 to June 2024). International grain prices are, however, projected to continue to fall in the context of buoyant supplies. In contrast, shipping prices are forecasted to remain low and stable, given a projected slowdown in global growth.
• The next policy decision will be on the 20th of December when it is expected that BOJ will maintain its policy rate at 7.0%.

(Sources: STATIN & BOJ)