With Declining Household Spending, Stagnant Inflation in Japan

Hiruki Nakamura
31 Jul, 2015
New York City

Inflation in Japan increased 0.4% in June from a year ago month and was unchanged at 0.1% from the previous month. With the latest decline in energy prices, inflation has been below the Bank of Japan

[R]4:30 PM Tokyo – Inflation index in Japan increased 0.4% in June from a year ago month and was unchanged at 0.1% from the previous month. With the latest decline in energy prices, inflation has been below the Bank of Japan’s target. Inflation may have more downward pressure next month as prices in Tokyo area fell in July.[/R]

Nikkei average jumped on Friday and the index closed up in the week after the latest read on inflation was below central bank’s target.

Consumer prices index in June increased 0.4% from year ago month, the Ministry of Internal Affairs and Communications said.

The department added in a preliminary estimate the consumer price index for Ku-area of Tokyo in July fell 0.2% from the previous month but increased 0.2% from a year ago month.

Separately, the ministry said average of household spending in June dropped 2% to 268,652 yen and average of monthly income per household of about jumped 2.8% to 733,589 yen while average of consumption expenditures per household decreased 1.4% to 293,042 yen from a year ago month.

The same department reported the seasonally adjusted unemployment rate in June unchanged at 3.4% from May.

The Ministry of Land, Infrastructure, Transport and Tourism said housing starts in June climbed 16.3% after increasing 5.8% in May.

Housing starts jumped to 1.03 million in twelve months to June from 0.91 million in twelve month period to May.

The Nikkei 225 Stock Average gained 62.41 or 0.3% to 20,585.24 and the broader Topix index rose 12.31 to 1,659.52.

For the week, Nikkei 225 edged up 0.2% and for the month increased 1.3%.

For the year-to-date Nikkei 225 has soared 17.8% and surged 33.2% from a year ago month.

The yen declined to 124.24 against a dollar.

Stocks in Review

Honda Motor Co Ltd gained 1.3% to 3.979.50 yen after the auto maker reported net sales in the first-quarter ending in June climbed 15.3% to 3.70 trillion yen from 3.21 trillion yen in a year ago period.

Net income in the quarter soared 19.5% to 186 billion yen compared to 155.6 billion yen and earnings per share dropped to 61.48 yen from 81.78 yen the same period a year ago.

Honda forecasted revenues for the year to climb 8.8% to 14.50 trillion yen and net income to jump 3.1% to 525 billion yen.

Honda added global car sales volume in the first-quarter climbed 4.9% to 1.15 million vehicles.

Mizuho Financial Group, Inc slid 0.04% to 267.90 yen after the banking services provider reported net sales in the first-quarter ending in June soared 13% to 796.95 billion yen from 704.71 billion yen in a year ago period.

Net income in the quarter rose 2.1% to 158.02 billion yen compared to 154.72 billion yen and earnings per share increased to 6.22 yen from 6.09 yen the same period a year ago.

The bank said estimated net income for the year to gain 2.9% to 630 billion yen.

Mitsubishi UFJ Financial Group Inc increased 0.8% to 900 yen after the financial services provider reported net sales in the first-quarter ending in June surged 19.8% to 1.56 trillion yen from 1.31 trillion yen in a year ago period.

Net income in the quarter jumped 15.5% to 277.76 billion yen compared to 240.49 billion yen and diluted earnings per share rose to 19.74 yen from 16.89 yen the same period a year ago.

MUFG forecasted net profit for the fiscal year ending in March 2016 of about 950 billion yen.

Resona Holdings Inc edged up 0.07% to 682.20 yen after the financial services provider stated net sales in the first-quarter ending in June rose 2.6% to 193.96 billion yen from 189.12 billion yen in a year ago period.

Net income in the quarter increased to 53.71 billion yen compared to 53.39 billion yen and earnings per share rose to 23.16 yen from 20.16 yen the same period a year ago.

Resona said estimated net profit for the fiscal 2016 to decline 17.2% to 175 billion yen.

Sumitomo Mitsui Financial Group, Inc jumped 1.1% to 5,544 yen after the banking and financial services provider reported net sales in the first-quarter ending in June jumped 12.6% to 1.26 trillion yen from 1.12 trillion yen in a year ago period.

Net income in the quarter climbed 16.1% to 267.87 billion yen compared to 230.82 billion yen and diluted earnings per share advanced to 195.79 yen from 168.72 yen the same period a year ago.

The bank forecasted net profit for the fiscal year ending in March 2016 to edge up 0.8% to 760 billion yen.

Sharp Corporation closed unchanged at 164 yen after the electric and electronic equipment maker said net sales in the first-quarter ending in June slid 0.2% to 618.30 billion yen from 619.73 billion yen in a year ago period.

Net loss in the quarter widened to 33.98 billion yen compared to 1.79 billion yen and net loss per share increased to 20.11 yen from 1.06 yen the same period a year ago.

Separately, the company plans to sell its Mexican TV manufacturing unit to Chinese TV maker Hisense Group for about 2.96 billion yen or $23.7 million.

The transaction is expected to close on January 6, 2016.