Japan’s inflation is expected to surge in November, driven by higher prices for rice, food, and industrial products. The weak yen has made Japanese goods more attractive to foreign buyers, boosting exports.
Japan’s November Inflation Data Expected to Show Acceleration, Exports on the Rise Despite Weak Yen
The core consumer price index (CPI) in Japan is expected to have risen 2.6% in November from a year earlier, according to a Reuters poll of 18 economists. This represents an increase from October’s 2.3%, driven primarily by higher prices for rice, food, and industrial products.
Higher Utility Bills Contribute to Inflation
The government’s decision to phase out utility subsidies has also contributed to inflation. The removal of these subsidies has led to higher energy prices, including electricity and city gas bills. This increase in energy costs is expected to have a positive impact on the value of exports, as the weak yen makes Japanese goods more attractive to foreign buyers.
Exports Expected to Show Growth
The poll also suggests that Japan’s exports are likely to have risen 2.8% in November from a year earlier, slowing down from October’s 3.1% increase. The weakness of the yen since mid-September has boosted the value of Japanese exports, making them more competitive in the global market.
A Deficit in Imports
Meanwhile, imports are estimated to have expanded by 1% from a year earlier, resulting in a deficit of 688.9 billion yen ($4.50 billion). This increase is attributed to the weak yen and sluggish global trade.
Leading Indicators Point to Strong Capital Spending
Machinery orders, a key indicator of capital spending for the coming six to nine months, are expected to have risen 1.2% in October from the previous month. Following a 0.7% drop in September, this increase suggests that businesses are preparing for increased investment and growth.
Key Data Releases
The Japanese government will release its November CPI data on December 20, along with other economic indicators. The trade data is expected to be published on December 18, while the machinery orders data will be announced on December 16.
