Japan core CPI likely re-accelerated in April despite energy subsidies- Reuters poll

By Kantaro Komiya

TOKYO (Reuters) – Japan’s core consumer inflation likely re-accelerated in April, a Reuters poll of 19 economists showed, as a flurry of retail price hikes offset the effect of the government’s energy subsidies.

Persistent inflation, coupled with three-decade-high wage hikes, have emboldened market speculation that the Bank of Japan is preparing for a policy shift, though Governor Kazuo Ueda has pledged to maintain current easing since he assumed office last month.

Japan’s core consumer price index (CPI), which excludes fresh food but includes energy items, likely grew 3.4% in April from a year earlier, the poll showed. The pace would step up from 3.1% seen in both March and February, and mark the fastest growth since a 41-year-high of 4.2% logged in January.

While government subsidies on gas and electricity bills have curbed households’ energy costs, more companies were raising prices of consumer goods and services at the beginning of the Japanese fiscal year in April, bringing core CPI growth up again, economists said.

The “core-core” inflation figure, which excludes both fresh food and energy items, likely reached 4% or more, SMBC Nikko Securities analysts wrote in a note.

Meanwhile, April’s wholesale inflation rate was forecast at 5.4%, slowing for a fourth month, thanks to moderating raw material price increases.

The government will release CPI data at 08:30 a.m. on May 19 (2330 GMT, May 18). Wholesale inflation data is due at 08:50 a.m. on May 15 (2350 GMT, May 14).

Easing inflationary pressures in international commodity prices likely brought Japanese imports down 0.3% by value in April from a year earlier, the first contraction since January 2021, the poll also showed.

Exports likely rose 3.0%, according to the poll. While car shipments have recovered given improved semiconductor supply, Japan’s export growth remains soft overall amid a global economic slowdown, said Takeshi Minami, chief economist at Norinchukin Research Institute.

The trade balance probably stayed at a deficit of 613.8 billion yen ($4.54 billion), the poll showed.

Trade data is due at 08:50 a.m. on May 18 (2350 GMT, May 17).

($1 = 135.0500 yen)

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