Watching real-time Japanese inflation at the cash register

The Bank of Japan – the developed world's monetary-policy outlier – is widely expected to raise interest rates soon. The central bank is also keen to see more inflation in the economy and a "positive wage-price spiral;" the BoJ most recently said that more companies are seeing the need to keep offering pay increases, given labor shortages and a minimum-wage hike.

To get a sense of inflation in real time, we can turn to the SRI-Hitotsubashi Consumer Purchase Price Index. This weekly measure is compiled by Hitotsubashi University and is based on data from point-of-sale terminals at thousands of retail outlets, including supermarkets and drugstores.

For the week beginning Dec. 16, our index stood at the equivalent of 2.9% inflation – a mild uptick of its November average of 2.7%. The Dec. 16 reading is also the same 2.9% rate as official November consumer price inflation – which had accelerated from 2.2% in October.

The Consumer Purchase Price Index differs from CPI in that it measures actual prices paid at the checkout counter, rather than relative changes in prices for a static basket of goods and services.

It may be more reflective of consumers' welfare than official price measures, and – importantly – provides early insights into inflation: official CPI for Japan won't be released until Jan. 24 – the same day as the next Bank of Japan policy announcement.

CEIC users can access more granular information in the SRI-Hitotsubashi dataset, which can be broken down by specific store types. Our second chart shows how the SRI-Hitotsubashi supermarket purchase price index has historically (and perhaps unsurprisingly) exhibited strong linkages with food inflation.

While price changes at supermarkets picked up somewhat in the weeks preceding Christmas (from 3.7% in the week of Dec. 2 to to 4.0% in the week of Dec. 16), that acceleration remains significantly tamer than what November's food CPI print would suggest (4.9% for November, versus 3.5% for September and October.)

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