TOKYO (Reuters) – Japan’s core consumer price inflation likely hit an eight-year high in September, a Reuters poll showed on Friday, as companies sought to ease pressure from higher raw material costs and a weaker yen by raising their prices.
Further data next week is expected to show the trade deficit will reach nearly $15 billion in September, as the sharp drop in the yen this year has inflated import costs, according to the survey.
The Japanese currency briefly fell to a 32-year low against the US dollar this week.
Economists expect the nationwide Core Consumer Price Index (CPI), which excludes volatile fresh food prices but includes energy, jumped 3.0% year-on-year in September.
“The main driver behind the increase is higher food prices, such as confectionery products and prepared foods,” said Rikoto Minami, analyst at Mizuho Research & Technologies.
The increase would mark the fastest rise since September 2014. Expectations are strongly that the core CPI will remain above the central bank’s 2% inflation target for the sixth consecutive month.
The Bank of Japan will hold its next policy meeting on October 27-28. It maintained its short-term target rate at -0.1% and maintained its pledge to guide 10-year government bond yields around 0% despite mounting price pressures, bucking the global trend of tight policy tightening.
Governor Haruhiko Kuroda has repeatedly vowed to keep the Bank of Japan’s stimulus efforts intact, as any cost rise in inflation will be temporary.
Separate data is likely to show that Japan ran a trade deficit of 2.167 trillion yen ($14.70 billion) in September due to higher import costs exacerbated by a weak yen, according to the survey.
This will be the 14th consecutive month of deficit and follows a record deficit of 2.817 trillion yen in August. The survey showed that imports by value were likely up 45.0% in September from the previous year, outpacing the 27.1% increase in exports.
The government will release consumer price data on October 21 at 8:30 am (October 20, 2330 GMT) and trade balance data on October 20 at 8:50 am (October 19, 2350 GMT).
(dollar = 147.4000 yen)