Shoppers at a supermarket in Tokyo. Japan’s nationwide core consumer price index, which includes oil products but excludes volatile prices of fresh fruit, vegetables and seafood, is expected to have risen 3%, a Reuters poll showed yesterday.
Japanese factory output probably recovered in September, but only moderately, and consumer price inflation may have dipped, a Reuters poll showed, adding to uncertainty over whether the government will decide to raise the sales tax again next year.
Other data next week will probably show that private spending remained lacklustre, while the unemployment rate may have ticked up last month, according to the poll.
Industrial production probably rose 2.2% in September from the previous month, the poll of 26 economists showed, after a revised 1.9% decline in August. That forecast is way below the 6% rise that manufacturers surveyed by the trade ministry had expected when it released the data for August last month.
“The economy is weak and exports lack momentum. Production activity will probably keep going up and down,” said an economist at Shinkin Central Bank in the Reuters survey.
The trade ministry will release the factory output data on October 29 at 8:50 am (October 28 at 2350 GMT). It will give manufacturers’ output forecasts for October and November at the same time. Separate government data on October 31 is forecast to show that core consumer price inflation slowed in September, indicating the Bank of Japan may need to adopt further easing steps to achieve its 2% inflation target for next fiscal year.
The nationwide core consumer price index, which includes oil products but excludes volatile prices of fresh fruit, vegetables and seafood, is expected to have risen 3%, the poll showed, after a 3.1% gain in August. Stripping out the impact of a sales tax increase in April, core inflation is expected to be 1%, after 1.1% in August and 1.3% in July.
Prime Minister Shinzo Abe has to decide this year whether to proceed with another sales tax increase next October, taking it to 10% from 8%. April’s increase from 5% caused the world’s third-biggest economy to shrink an annualised 7.1% in the second quarter from the first. Analysts in a separate Reuters survey forecast the economy would only recover by an annualised 2.9% in the third quarter. Core consumer prices in Tokyo, available a month earlier than the national index, are forecast to rise an annual 2.5% in October, down slightly from 2.6% in September. “Falls in gasoline prices reflecting an international resource price decline will contribute to a slowdown in consumer price inflation,” said an economist at Mitsubishi Research Institute.
Despite recent weak data, the BoJ appears set to resist pressure for more stimulus measures or to accept that its inflation target is unrealistically high at a policy meeting on October 31, according to people familiar with its deliberations.
The trade ministry will announce retail sales for September next Tuesday. The data is expected to show an annual 0.6% rise, up for a third straight month but slower than the 1.2% gain in August.
Household spending is forecast to drop 4.3% in September from a year before, the poll showed, down for a sixth straight month. The jobless rate may have have risen to 3.6% in September, according to the poll, from 3.5% in August. And the jobs-to-applicants ratio will probably be at 1.09, inching down from the 1.10 marked in June, July and August, the highest in 22 years.
