Japan’s core consumer inflation is expected to have slowed for the second consecutive month in October, as energy price growth moderated, according to a Reuters poll released on Friday.
The core consumer price index (CPI), which includes oil products but excludes fresh food, is forecast to have risen by 2.2% year-on-year in October, down from a 2.4% increase in September. The forecast comes from a survey of 19 economists.
Analysts at SMBC Nikko Securities noted that the base effect from the Japanese government’s decision to halve electricity and city gas subsidies in October of the previous year is likely contributing to the slowdown in energy price inflation. This change, along with a deceleration in energy price growth, is expected to keep overall inflation growth subdued.
The Ministry of Internal Affairs and Communications will release the official October CPI data on November 22 at 8:30 a.m. local time (November 21 at 2330 GMT).
A separate Reuters poll conducted earlier this month revealed that a slight majority of economists believe the Bank of Japan (BOJ) will refrain from raising interest rates at its upcoming December meeting. However, nearly 90% of those surveyed expect rates to increase by the end of March 2024. The yen’s significant depreciation in recent months has put additional pressure on Japanese households by raising the cost of imports.
In trade data, exports are expected to have increased by 2.2% in October from a year earlier, marking a recovery from the 1.7% decline in September. On the other hand, imports are anticipated to have fallen by 0.3% year-on-year, resulting in a trade deficit of ¥360.4 billion ($2.30 billion). This follows a 2.1% rise in imports in September.
Takeshi Minami, chief economist at Norinchukin Research Institute, pointed out that while the U.S. economy remains resilient, overall global trade is showing signs of sluggishness, which could be dampening Japan’s trade performance.
Meanwhile, machinery orders—a volatile but leading indicator of future capital spending—are forecast to have increased by 1.9% in September, reversing a 1.9% drop in August. Machinery orders are closely watched as they provide insight into business investment plans for the coming months.
The Ministry of Finance will release trade data on November 20 at 8:50 a.m. local time (November 19 at 2350 GMT), while the Cabinet Office will publish machinery orders data on November 18 at 8:50 a.m. local time (November 17 at 2350 GMT).
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