Marginally above the level expected by economists
The rise in prices in Japan reached a level not seen since 1982, amid a weakening of the yen against the US dollar, which makes imports more expensive, and a flare-up in energy prices.
Inflation in Japan was 3.6% in October on an annual basis (excluding fresh produce), data released today show, marginally above the level expected by economists polled by the Bloomberg news agency (3.5%). It was at 3% in September.
If energy is excluded from the index, inflation was noticeably lower (2.5%), although it increased from September, due to the increase in the prices of other products, primarily food.
Inflation in Japan has exceeded the target set by the central bank since April (2% excluding fresh products)but this “cost inflation”, due to energy and food prices, does not push the institution to conclude that the conditions for a rear shock are present, to implement a tighter monetary policy.
The widening gap between the Bank of Japan’s monetary policy and that of other developed economies, especially the US, has sent the yen falling against the dollar, pushing up the cost of imports.
Japan’s trade deficit weighed on GDP in the third quarter: it fell 0.3% from a year earlier, according to preliminary data released on Tuesday.
However, with the recent recovery of the yen and the downward trend in energy prices globally, Japan’s trade deficit is expected to narrow from the fourth quarteraccording to some economists.
Inflation is also expected to recede from early 2023, after a package of measures by Prime Minister Fumio Kishida’s government to reduce Japanese energy bills was implemented in January.
In late October, the IMF revised its inflation forecast to 2.9% for the 2022/2023 fiscal year, which ends in March (1.8% if fresh produce and energy are removed), but expects it to fall to 1.6% in 2023/2024 and will remain at this level in 2024/2025.
RES-EMP
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