The link between consumer confidence and prices has weakened in the last 18M. But it hasn't broken, as January data show: consumer confidence fell quite sharply this month, as price expectations rose. The implication is that while nominal wages are rising, they still aren't going up quickly enough.

SPPI inflation remains in an uptrend, and is now running around 3.5% saar. A few months ago the BOJ rejigged the data to include a breakdown by labour content, and that shows SPPI rising most quickly in high-labour industries. This will give the bank further confidence in its price-wage story.

Export volume strength sustained through end-24. From the low of early 2023, shipments have risen by 30%. That's a growth rate rarely topped in the last 15 years, despite today's headwinds of tariffs and a global market share that is already large. Import growth, conversely, has rarely been weaker.

My estimate of YoY trimmed mean inflation ticked up for the second consecutive month in December. That matters when the Tankan's measure of output prices has been warning the fall-back in inflation since was overdone. The backdrop is international core inflation settling at 2% saar since August.

Firms haven't responded in textbook fashion to the weaker JPY. While the currency is down 35% since 2019, export volumes have risen just 7%. The reason is export prices haven't been cut, with the weaker JPY instead flowing straight to the bottom line. In JPY terms, exports rose 50% in 2019-24.

Today's household sector details of Q3 GDP show real incomes rose for a third consecutive quarter. That seems to bring to an end what had been a terrible period for incomes, and with the labour market remaining tight, suggests last year's recovery in consumption should continue.

After diving in December, consumer confidence rose in January, but not much. For the BOK it was good news that expectations for property prices softened again, and ticked down for overall inflation. Near-term price expectations rose, but that likely reflects food prices at the beginning of the year.

If you want evidence of supply chain shifts away from China, Taiwan's data provides it. Exports and FDI show a big move towards the US and other Asia. In today's export order data for December, the overseas production ratio for IT products fell again, and is now at the lowest level since 2007.

The Q4 release was tougher to interpret than usual. It included the effect of the upwards revision in nominal GDP level announced at end-2024, but didn't give a back series for revised NGDP for earlier quarters. Today that history was published. The highlight? Still no change in the deflator.

Consumer confidence in the BOJ's Q4 quarterly survey was surprisingly weak in light of other data suggesting the mood has improved. Sentiment around income remained strong, but consumers continue to complain about high prices.