Japanese core inflation is likely to slow down in February from the previous month due to the start of energy subsidies, a Reuters poll shows, although the overall price trend will likely to keep policy makers on the track to raise interest rates again this year.
The Core Consumer Price Index (CPI), which includes oil products but does not include the price of fresh food, is expected to rise 2.9% in February from the previous year, a poll shown by 18 economists on Friday. That figure is compared with 3.2% in January.
“Although the price growth of oil products is expected to continue to increase, the impact of the start of subsidies on electricity and city gas prices is expected to be stronger,” Analysts said at SMBC Nikko Securities.
A separate index that eliminates the effect of the cost of fresh food and fuel, which is watched by Bank of Japan as an indicator of a wider price trend, is likely to remain around 2.5% January in February, said Ryosuke because, a market economist in Mizuho Securities.
The price trend is the determination of Boj to continue to raise interest rates, with market expectations centered on the increase that occurred in the third quarter. Most considerations about policy have also been encouraged by US economic policy Donald Trump and their global impact.
The Ministry of Internal Affairs will release CPI data in February at 8:30 am on March 21 (2330 GMT on March 20).
The poll also showed that exports were estimated to have risen 12.1% in February from the previous year, taking from a growth of 7.2% in January.
Imports are estimated to rise 0.1% last month-to-year-year, produced a trade surplus of 722.8 billion yen ($ 4.88 billion). Imports rose 16.7% in January.
“While the recovery rate in exports is expected to remain moderate, there is a strong possibility that imports will decrease due to the end of the Yen depreciation and price increases, as well as a reaction to the sharp increase in imports in January,” said Takeshi Higashifukasawa, an economist at Mizuho Research & Technologies.
Yen has recovered to the dollar in recent weeks with a growing market betting that BOJ will continue to raise interest rates, while the US Federal Reserve remains on the track to cut the loan costs further even at a slower speed.
The dollar last rose 0.3% against Yen at 148.25 during trading Friday morning in Tokyo, far from the lowest level of three decades close to 162 hit years ago.
Machine orders, indicators of very unstable capital expenditure but prominent for the next six to nine months, may drop 0.5% in January from the previous month, following a 1.2% decline in December, according to a poll.
The government will release trading and machinery data at 8:50 am on March 19 (2350 GMT on March 18).
Source: Reuters
