Inflation in Japan may reach a maximum of 8 years

The results of a Reuters poll on Friday showed that in September Japanese consumer inflation probably reached an eight-year-high. This happened because the companies aimed to compensate for the high cost of raw materials and the fall of the national currency by rising prices.

Probably next week, the data will show that the amount of the trade deficit in September will be almost 15 billion dollars. The value of imports has risen this year due to the sharp fall in the yen.

According to experts, the Core CPI (Core Consumer Price Index) which includes energy prices without volatile commodities such as fresh products, rose by 3.0% year-on-year in September.

Mizuho Research & Technologies analyst Rikuto Minami declared that inflation is mostly caused by the growing prices for food like semises and confectionery products.

Core CPI exceeds the Central Bank inflation target by 2% for the sixth month in a row. The next meeting of the Bank of Japan will take place on October 27-28. There is a chance that the short-term target interest rate won’t rise above -0.1% and the yield on 10-year government bonds will remain at 0%. Moreover, price pressure increases despite the global trend for aggressive policy tightening. 

The governor of the Japanese Central Bank Haruhiko Kuroda several times promised to continue to support the economy and that any increase in inflation caused by the resulting costs will be temporary. 

Poll results will probably show that according to some reports, Japan's trade deficit in September reached 2.167 trillion yen. In terms of dollars, it amounts to 14.70 billion. This was caused by high import costs combined with a weakening yen.

This is the 14th straight month of deficit after a record shortfall of 2.817 trillion yen in August. According to the survey, the value of imports in September probably increased by 45.0% in September and outpaced the growth of exports by 27.1%. This is more than last year.

On October 20 at 8:50 (October 19, 23:50 GMT) trade balance data will be released. October 21 at 8:30 (October 20, 23:30 GMT) customer price data will be released.