Japan’s December core inflation likely steady, BoJ policy seen unchanged
We expect the core CPI index will stay around the same level in the following few months. Yoshiki Shinke, chief economist a t Dai-ichi Life Research Institute
TOKYO: Japan’s consumer prices are expected to have posted a 12th straight month of gains in December, a Reuters poll found, although the persistently modest inflation will pressure the central bank to maintain its stimulus to meet its two per cent target.
Economists project the Bank of Japan (BoJ) will keep its short-term interest rate at minus 0.1 per cent and the 10-year government bond yield target at around zero per cent next week, the poll showed.
Data next week also includes exports for December, which was seen growing for a 13th straight month, thanks to overseas demand for semiconductor manufacturing equipment, steel and cars.
The nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, likely grew 0.9 per cent in December from a year ago, the same rate as November, the poll of 20 economists showed.
Economists say price gains in electricity and gas slowed, while those of petroleum products continued to support consumer inflation.
Analysts forecast core consumer prices in Tokyo, available a month before the nationwide data, rose 0.8 per cent in January, also unchanged from December.
“We expect the core CPI index will stay around the same level in the following few months,” said Yoshiki Shinke, chief economist a t Dai-ichi Life Research Institute.
“Oil prices and an annual wage negotiations in spring will be closely watched for the outlook for consumer information.”
Prime Minister Shinzo Abe has been pushing Japanese companies to raise wages by three per cent or more to support consumer spending, thus encouraging inflation.
The internal affairs ministry will announce consumer prices data at 8.30am Tokyo time on January 26.
The poll showed exports grew 10.1 per cent in December compared with a year ago, up for 13 straight month but the expected pace of growth is slower than 16.2 per cent in November.
Imports were expected to show a 12.3 per cent increase, which would make trade surplus at 530 billion yen (US$4.78 billion), the poll showed.
“Exports continued to grow but recovery in domestic demand and rises in import costs due to higher oil prices shrank trade surplus,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.
The finance ministry will release trade data on January 24.
The BoJ is set to maintain upbeat price forecasts next week and paint a slightly better picture of the economy than it did three months ago, signaling its conviction the country is making slow but steady progress in eradicating deflation. — Reuters