Bank of Japan (BoJ) Trimmed Mean Core CPI y/y

BoJ Trimmed Mean Core CPI y/y reflects a change in prices of goods and services from the consumer perspective, in the specified month compared to the same month of the previous year. The CPI excluding food and energy, which are highly sensitive to seasonal fluctuations or government regulation, is considered to be the most reliable reflection of consumer prices.

This is one of the alternative approaches to assessing core inflation. Apart from excluding highly volatile product and energy prices, 10% of the consumer basket elements having the smallest changes in prices and 10% of those the highest change are also excluded to calculate the Trimmed Mean CPI. The consumer basket is then estimated by the remaining set.

The rationale for such "trimming" is that sometimes changes in prices of specific goods or services can be too large or too small, which affects the resulting average inflation value. Relevant price changes may distort the resulting values. For example, if highly volatile items have big weights, this may affect the average values accordingly. Thus, such items are excluded from the calculated sample.

The index is created based on retail price statistics surveys released by the Ministry of Internal Affairs and Communications. The statistics collection started in August 1946. General statistics refers to the National Consumer Price Index. The trimmed CPI is considered to be the most suitable index for evaluating the medium-term consumer price inflation trends.

Higher than expected readings are usually considered favorable for JPY quotes (since the BoJ can raise rates to fight inflation, which in turn can attract foreign investment).