Flash: Japan leaving deflation behind, only the begining - Nomura

FXstreet.com (Barcelona) - The latest all-Japan core core CPI data, +0.4%, has risen by 0.8ppt in just three months, from -0.4% in April, and while Tomo Kinoshita, Chief Economist at Nomura, cautions that this reflects declines in energy prices last year, he also says "it suggest underlying domestic prices are steadily moving toward leaving deflation behind, and we expect that to continue, though we look for y-y changes in energy prices to be a disruptive factor though to September."

Kinoshita adds: "We have been expecting the all-Japan core CPI to move into positive y-y territory by mid-2013, and the latest data shows it trending broadly in line with our projections. We think the Japanese economy likely to sustain relatively high growth from Apr-Jun onward given favorable developments in such areas as personal consumption, capex, and exports. We continue to expect inflation steadily to pick up as the GDP gap gradually narrows."