Update on Japanese inflation

Here area couple more points to add to the graph from this post; we're still above the predicted price level but it seems right on for averaging 0% inflation and the VAT increase is looking more and more like a temporary jump:

I'd like to emphasize that the model fit stops in 2013 -- data from before 2013 were used to fix the parameters of the model, and the subsequent results are "out of sample" (but given the latest NGDP and monetary base/currency numbers).
The result is hovering at the bleeding edge of the error band and there are several possibilities for the discrepancy. One is that there will be upward revisions in NGDP (or downward revisions in the price level. Another possibility is that the data is experiencing another of its occasional excursions from the model (that might be based on human behavior, for example). If we zoom out a bit, we can see the last period like this in 2008:

How about if we concentrate on the trend alone? I performed the smoothing I did in this post and the result is pretty much spot on (assuming the VAT was a one-time event):

Actually the temporary nature of the VAT increase becomes even more apparent if we look at the inflation rate (this time there is no red counterfactual no-VAT scenario):

This goes right through the data with the VAT increase appearing as a spike.
Overall, there doesn't yet appear to be any reason to abandon the information transfer model.

Update/correction 9/30/2014:

The first graph was a bit messed up. I correct a couple of the graphs and add data points here:

http://informationtransfereconomics.blogspot.com/2014/09/inflation-in-japan-updatecorrection.html