FILE PHOTO: A man buys fish at a market in Tokyo, Japan March 3, 2023. REUTERS/Androniki Christodoulou/File Photo
TOKYO: Japan’s consumer inflation rate likely picked up in July for a third consecutive month, a Reuters poll of 18 economists showed, keeping the central bank on course to consider another rate hike after lifting short-term rates to 0.25 per cent last month.
Other data next week is forecast to show that export growth accelerated in July thanks to recovering auto and chip-related shipments, although it would undershoot import gains and result in a trade deficit.
The core Consumer Prices Index (CPI), which excludes fresh food but includes energy items, likely rose 2.7 per cent year-on-year in July, ticking up from a 2.6 per cent rise in the previous month.
Although price hikes in food and service costs like hotel fees decelerated, the end of the government’s energy subsidies likely led to a faster headline inflation figure, said Takeshi Minami, chief economist at Norinchukin Research Institute, citing an earlier Tokyo-area inflation data for July.
That would put the inflation rate above the Bank of Japan’s 2 per cent target for the 28th straight month, supporting BOJ officials’ view that the central bank should keep normalising adjusting its ultra-easy policy if the economy and prices move in line with its projections.
Data on Thursday showed Japan’s economy expanded by a much faster-than-expected annualised 3.1 per cent in the second quarter, rebounding from a slump at the start of the year thanks to a strong and much-needed rise in consumption, further supporting the view that more rate hikes are on the cards.
Elsewhere in the poll, economists predicted exports likely rose 11.4 per cent on year in July, faster than June’s 5.4 per cent gain. Imports were forecast to have grown by even faster 14.9 per cent, due in part to weak yen’s impact on energy imports, versus 3.2 per cent in the previous month, leaving an estimated trade deficit of 330.7 billion yen ($2.22 billion).
The internal affairs ministry will release the CPI data at 8:30 a.m. on Aug. 23 (2330 GMT, Aug. 22), and the finance ministry will announce the trade statistics at 8:50 a.m. on Aug. 21 (2350 GMT, Aug. 20).
Machinery orders, a highly volatile but leading indicator of capital spending for the coming six to nine months, likely rebounded to 1.1 per cent month-on-month growth in June after a 3.2 per cent decrease in May, the poll showed. The data is due at 8:50 a.m. on Aug. 19 (2350 GMT, Aug. 18).
