Japan inflation seen weak despite export boom as COVID hits consumption: Reuters poll By Reuters

Japan inflation seen weak despite export boom as COVID hits consumption: Reuters poll By Reuters


© Reuters. Workers load containers onto trucks from a cargo ship at a port in Tokyo, Japan, March 16, 2016. REUTERS/Toru Hanai


By Daniel Leussink and Leika Kihara

TOKYO (Reuters) – Japan’s export boom extended into in July but consumer prices likely fell, a Reuters poll showed, highlighting the divergence between manufacturers benefiting from robust global demand and retailers suffering from a resurgence in COVID-19 infections.

The mixed batch of data will likely highlight the challenge policymakers face in combating a spike in Delta variant cases, without choking off a fragile economic recovery.

Exports likely surged 39.0% in July from a year earlier after a 48.6% spike in the previous month, according to analysts polled by Reuters, though the figures are inflated by the base effect of last year’s pandemic-induced slump.

“Exports will remain strong with capital and IT-related goods serving as main drivers thanks to robust global demand for capital expenditure,” said Kenta Maruyama, an economist at Mitsubishi UFJ (NYSE:) Research and Consulting.

Imports likely rose 35.1% in July from a year earlier partly due to rising raw material costs, the poll showed.

In a sign of weak domestic demand, Japan’s core consumer prices likely fell 0.4% in July from a year earlier, according to the poll.

The drop is partly due to a change in the base year for the consumer price index (CPI) that gives a heavier weighting to cellphone charge fees, which have fallen sharply recently.

Analysts expect the base-year change to shave about 0.7 percentage point off core CPI. Under the new base year, core consumer prices fell 0.5% in June, according to the government, compared with a 0.2% gain under the old base year.

“Japan won’t see inflation accelerate as much as in the United States and Europe with service-sector firms under strain from the pandemic,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

Core machinery orders, meanwhile, likely shrank 2.8% in June, falling for the first time in four months in a worrying sign for capital expenditure, the poll showed.

The government will release the trade and machinery orders data at 8:50 a.m. on Aug. 18 (2350GMT, Aug. 17). The consumer price data is due out 8:30 a.m. on Aug. 20 (2330GMT, Aug. 19).

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a Reply