The December 2019 inflation numbers are a bit hard to swallow, but the good news is that December’s inflation does NOT represent a trend, but instead a temporary spike that we expect to soon recede. #BOJSpeaks #FinanceTwitterJa 🧵 
2. There is also a context. The biggest reason for the spike in year-over-year inflation in December 2019 is the continued impact of the November 2019 shock to agriculture, highlighted in the hike in vegetable prices, which proved a bit more persistent than BOJ expected.
3. Monthly inflation (a comparison to the previous month) for December, in addition to a slight reduction in starchy foods, DID reflect the vegetable price reductions we noted earlier, with monthly inflation for vegetables at only 1% compared to 10.6% in November.
4. What this means, though, is that the price reductions we saw did not impact overall prices quickly enough during the month to generate negative inflation - overall price decreases- for vegetables, and stopped short at a very small increase instead. Yes, we're impatient, too.
5. To compound matters, the 6.2% year-over-year inflation figure for December 2019 is also partially exaggerated because it represents a comparison to a period – December 2018 – when inflation was an extremely low (by our current standards) 2.4%.
6. The temporary November/December spike in inflation is therefore purely a result of a weather-related shock and not a sign of any policy-influenced price increases.
7. Central banks, of course, do not control the weather or commodities like oil, which can greatly influence inflation. Why, then, do we still try to manage overall inflation? That's something we’ll discuss further, so stay tuned.
8. In the interim, however, it is good to note that our strongest weapon against persistently unfavourable inflation (too high or too low) is always our own behaviour and expectations, which is why knowing and understanding what is happening with inflation is always important.
9.
