Indicators for Core CPI
Lead — The desk sees the Bank of Japan's focus on core inflation indicators as a pivotal element in shaping monetary policy and influencing JPY dynamics. Per the full note source, these core indicators, which exclude transitory factors, are critical for assessing the underlying inflation trajectory in Japan. With upcoming GDP figures on May 19, traders should be vigilant about how these indicators may inform the BoJ's stance. Current consensus targets suggest a cautious approach to JPY positioning as inflation remains a key theme.
What the desk is arguing
The desk posits that the Bank of Japan's emphasis on core CPI indicators will significantly influence market expectations regarding future monetary policy. Per the full note source, these indicators are designed to strip away the noise from temporary price fluctuations, providing a clearer view of Japan's underlying inflation dynamics.
The BoJ's methodology includes various measures, such as the trimmed mean and weighted median, which help to paint a more accurate picture of inflation trends. Recent data releases have shown persistent inflation pressures, which could prompt the BoJ to reconsider its accommodative stance if core indicators continue to rise.
Where it sits in our coverage
Our consensus target for USD/JPY is 1.075, with a range between 1.04 and 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This view aligns with jpmorgan, which also anticipates a gradual shift in the BoJ's policy stance, while bofa remains more cautious, reflecting a divergence in outlook among firms.
How other firms see it
Firms like jpmorgan and citi are aligned in their expectation of rising inflation leading to a potential policy shift from the BoJ. Conversely, bofa and goldman express skepticism about the sustainability of inflationary pressures, suggesting a more dovish outlook.
Traders should also keep an eye on the USD/JPY pair, as its movements will likely reflect the BoJ's evolving stance on inflation and interest rates, particularly in light of the upcoming GDP data.
What the calendar says
With the GDP Growth Rate and Gross Domestic Product figures set to release on May 19, these events will be critical in assessing the economic backdrop against which the BoJ is operating. The data could provide further insights into the inflation trajectory and influence market sentiment leading into the BoJ's next policy meeting.
Key takeaways
- 01Core CPI indicators are crucial for understanding Japan's inflation dynamics.
- 02Upcoming GDP data could influence the BoJ's policy direction.
- 03Market positioning in JPY may be affected by inflation expectations.
- 04Divergence exists among firms regarding the sustainability of inflation.
Market implications
Traders should monitor the USD/JPY level closely, particularly as it approaches 1.075, which aligns with our consensus target. The upcoming GDP data on May 19 could serve as a catalyst for volatility in JPY positioning.
Indicators for Core CPI 日本語 Research Data Explanation and Related Materials Notices of Changes Notice Inquiries Core inflation indicators -- obtained by removing transitory disturbances and institutional factors from the actual movements observed in the consumer prices -- are frequently used for inflation analysis. Such "core indicators" are essential for identifying the underlying inflation rate, together with other indicators including the output gap, labor market tightness, inflation expectations, and wage growth rate. This page presents the Bank of Japan's Research and Statistics Department staff estimates for core indicators, including (i) consumer price indices that exclude "institutional factors" (Note 1) , as well as (ii) indicators based on the distribution of price changes across items (the trimmed mean; the weighted median; the mode; and the diffusion index of increasing/decreasing items) (Note 2) .
Data are, in principle, released at 2:00 p.m., two business days after the release of the official CPI for Japan. (Note 1) The Bank of Japan's Research and Statistics Department staff estimates exclude the effects of institutional factors from official data released by the Ministry of Internal Affairs and Communications. These institutional factors include: (1) changes in the consumption tax rate; (2) policies concerning the provision of free education; (3) the reduction in mobile phone charges in 2021; (4) travel subsidy programs; and (5) measures to reduce the energy cost burden (such as gasoline prices, electricity and gas charges). Please note that the definition of institutional factors may be subject to change without prior notice. (Note 2) For more information on the estimation procedures and characteristics of the trimmed mean, the weighted median, the mode, and the diffusion index of increasing/decreasing items, please see the Bank of Japan Review Series below.
Hogen, Kawamoto, and Nakahama (2015) "Core Inflation and the Business Cycle," Bank of Japan Review Series (2015-E-6). Shiratsuka (2015) "Performance of Core Indicators of Japan's Consumer Price Index," Bank of Japan Review Series (2015-E-7). Research Data Table : Research Data Date Title Data Apr. 28, 2026 Charts [PDF 18KB] Apr. 28, 2026 Data [XLSX 69KB] Explanation and Related Materials Bank of Japan Review Series Hogen, Kawamoto, and Nakahama (2015) "Core Inflation and the Business Cycle," Bank of Japan Review Series (2015-E-6).
Shiratsuka (2015) "Performance of Core Indicators of Japan's Consumer Price Index," Bank of Japan Review Series (2015-E-7). Notices of Changes Mar. 26, 2026 Release of Research Data "Indicators for Core CPI" Feb. 9, 2017 Changes in the Data Series and Release Schedule of the Research Data "Measures of Underlying Inflation" Notice Charts and data available here are provided to inform some of the Bank of Japan's research and analysis to a wide range of users with interests in economic and financial developments. Please note that these charts and data are subject to unscheduled changes, revisions, and terminations.
Please contact the Bank of Japan's Research and Statistics Department to request permission when reproducing or copying the content of these charts and data for commercial purposes. Please credit the source when quoting, reproducing, or copying the content of these charts and data. Inquiries Economic Assessment and Projection Group, Economic Research Division, Research and Statistics Department Tel : +81-3-3279-1111
Sources & References
How we cover this story
Primary source
Indicators for Core CPI