Japan Consumer Inflation Hit 8-Year High in September: Poll

Japan’s consumer inflation rate is likely to have hit an eight-year high in September, according to a Reuters poll.

Economists predicted that the country’s core consumer price index (CPI) climbed by 3.0% year-on-year in September, as firms sought to offset pressure from high raw material costs and a sliding yen by hiking their prices.

“The main driver behind the increase are rising prices of food such as confectionary products and prepared foods,” said Rikuto Minami, an analyst at Mizuho Research & Technologies.

The increase would mark the fastest rise since September 2014. The forecasts strongly suggested that core CPI will stay above the central bank’s 2% inflation target for a sixth consecutive month.

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Trade Troubles

Japan’s trade deficit will come in at close to $15 billion in September, as the yen’s sharp decline this year swelled import costs, according to the poll.

It would be the 14th straight month of deficits and follow a record 2.817 trillion yen shortfall in August. Imports by value likely surged 45% in September from a year earlier, outpacing a 27% rise in exports, the poll showed.

The Japanese currency also briefly slid to a 32-year low against the US dollar this week.

Interest Rate Target

The Bank of Japan will hold its next policy meeting on October 27 and 28.

It has kept its short-term interest rate target at -0.1% and maintained its pledge to guide 10-year government bond yields around 0% despite broadening price pressures, bucking a global trend of aggressive policy tightening.

Governor Haruhiko Kuroda has repeatedly vowed to keep the BOJ’s stimulus effort intact, because any cost-push rise in inflation would be temporary.

The government will release the consumer price data on October 21 at 8:30am (October 20, 2330 GMT) and the trade balance data on October 20 at 8:50am (October 19, 2350 GMT).