Tokyo’s stopped energy subsidies probably caused inflation to spike, according to a Reuters poll
Tokyo: According to a Reuters poll released on Friday, Tokyo’s consumer inflation rate probably increased in December due to rising food prices and the government’s decision to stop providing gas and energy subsidies.
The anticipated increase may encourage the Bank of Japan, which on Thursday opted to maintain interest rates at 0.25 percent, to increase borrowing costs in the next year.
According to the median prediction of 17 experts, Tokyo’s core consumer price index (CPI), a key gauge of national pricing trends, was predicted to have increased from 2.2% in November to 2.5% year-over-year in December.
“With the end of the subsidies for electricity and city gas provided by the government, energy prices are expected to rise, pushing up the core CPI significantly,” according to SMBC Nikko Securities analysts. Fresh food costs are not included in the core CPI, but oil goods are.
According to the researchers, a faster rate of growth in the price of food, notably rice, is anticipated to also raise inflation.
However, in an effort to reduce the high cost of fuel, the government plans to reinstate gas and electricity price subsidies for three months starting in January.
According to official statistics released on Friday, Japan’s core CPI, which includes energy goods but does not include fresh food, increased 2.7% in November from 2.3% in the same month last year.
On December 27 at 8:30 a.m. Japan time (December 26 at 2330 GMT), the internal affairs ministry publishes the December Tokyo CPI figures.
According to the survey, Japan’s industrial production probably shrank 3.4% in November compared to the same month the previous year. That would come after the 2.8% growth in October.
Analysts ascribed the November decline to reduced production of transportation machinery as a result of production reductions at a significant foreign aircraft manufacturer and production of production machinery, such as equipment used in the creation of semiconductors, compared to October.
The factory production data is released by the industry ministry on December 27 at 8:50 a.m. Japan time (December 26 at 2350 GMT). Additionally, it will provide retail sales data, which were predicted to have increased 1.7% in November compared to the same month last year.
According to the survey, Japan’s unemployment rate in November was probably 2.5%, which was the same as it was in October, and the country’s jobs-to-applicants ratio was predicted to have stayed at 1.25.
On December 27, the employment statistics will be released at 8:30 a.m.
