The Strategist

Economists expect high inflation and foreign trade deficit in Japan

07/15/2022 - 08:49

In June, the annual rate of core inflation in Japan was higher than the central bank's objective of 2 percent, according to economists surveyed by Reuters. This is a warning that the economy is coming under more pressure from rising commodity prices and a falling yen.

The numbers from the following week are likewise anticipated to reveal a very big yearly increase in June imports, which should explain the significant negative trade balance.

The core CPI, which includes energy prices but excludes volatile fresh food prices, is expected to have increased by 2.2 percent from last June, the quickest rate of inflation since March 2015.

Official inflation data is anticipated to be made public on July 21, after the Bank of Japan finishes its meeting. It is likely to improve its inflation forecast while maintaining its extraordinarily accommodative monetary policy.

According to economists, Japan's imports will increase by 45.7 percent from a year ago in June, while its exports will increase by 17.5 percent.

The trade deficit expectedly increased to 1.510 trillion yen ($10.86 billion) in June as a result of an increase in imports.