Japan inflation has risen again.
Last week, Japan revealed that its Consumer Price Index (CPI) and Core CPI remained above the Bank of Japan's (BOJ) 2% target in April. The CPI increased more than expected from the previous month, leading to predictions of significant stimulus measures this year.
The government's Economic Policy Committee held a meeting and released a report on Thursday. The report indicated that several experts advised BOJ Governor Haruhiko Kuroda to phase out large-scale economic stimulus measures and end quantitative easing (QE) as Japan's inflation rate exceeded the current 2% target set by the BOJ.
The disclosed CPI, excluding fresh food but including energy, rose by 3.4% compared to the previous year in April, aligning with expectations. This increase followed a 3.1% rise in March. Analysts suggest that the April increase, which marks the beginning of Japan's new business year, may prompt many companies to adjust their retail prices. However, the upward pressure on prices could cause inflation to surpass BOJ's 2% target for a longer period than anticipated.
The Core CPI, which excludes fresh food and energy and is closely monitored by the BOJ as a key measure of domestic price trends, increased by 4.1% in April compared to the same period last year. Meanwhile, the inflation rate in the service sector rose to 1.7% in April from 1.5% in March, indicating that the rising labor costs may be starting to spread to broader consumer inflation.
Analysts suggest that as raw material costs have reached their peak, the sustained increase in service and food prices reflects widespread inflationary pressures that could prompt the BOJ to reconsider and raise its inflation expectations for this year. According to Riwataro Kono, Chief Economist at BNP Paribas in Japan, "BOJ may have little choice but to review and raise its inflation expectations in July, as the projected inflation figures are increasing. The likelihood of policy changes may also increase."
Darrin Tye, an economist at Capital Economics, stated, "Given the continued pressure on food prices, we expect the underlying inflation rate to reach a peak of 4.5% by mid-year, but the inflation cycle may be in its final stages as significant producer price inflation has already decreased over the past three months. Therefore, we anticipate a rapid decline in the inflation rate in the latter half of the year."
Technical analysis data (5H)
Resistance: 137.86, 138.03, 138.21
Support: 137.51, 137.33, 137.17
Buy/Long 1: If the price touches the support range of 137.33 - 137.51 but fails to break the resistance at 137.51, consider setting a TP around 138.03 and a SL around 137.17, or according to your acceptable risk level.
Buy/Long 2: If the resistance range of 137.86 - 138.03 is successfully broken, consider setting a TP around 138.21 and an SL around 137.33, or according to your acceptable risk level.
Sell/Short 1: If the price touches the resistance range of 137.86 - 138.03 but fails to break the resistance at 137.86, consider setting a TP around 137.33 and an SL around 138.21, or according to your acceptable risk level.
Sell/Short 2: If the support range of 137.33 - 137.51 is successfully broken, consider setting a TP around 137.17 and an SL around 138.03, or according to your acceptable risk level.