NEW YORK, February 2 (FinanceEnquiry.com) - Analyst Takehiro Sato at Morgan Stanley highlights the policy implications of CPI data in Japan.

 In a research note published yesterday, analyst Sato mentions that the nationwide December Japan-style core dropped YoY for the third straight month. The major negative contribution was made by household durables (-0.03pp) and durable cultural and entertainment goods (-0.03pp), while energy (+0.02pp), food (+0.03pp), accommodation (+0.03pp) and packaged tours (+0.02pp) were among the positive contributors.

The overall outlook lacks direction, with items that gained this month going on the path for price drops in the month ahead. The analyst expects the triggers for recovery in underlying prices to remain slim, given the worsening impact of past output gap and delayed materialization of strength in Yen.