Inflation likely to fall back soon

With the yen broadly stable since last May, import price inflation has already started to moderate and will probably fall sharply in the next few months. As wage growth is still muted and spare capacity is unlikely to diminish much further in the near-term, consumer price inflation, excluding the impact of the consumption tax hike, should start to drop back soon too. In turn, this will only increase the pressure on the Bank of Japan to announce additional monetary easing.