TOKYO (Reuters) – Consumer inflation in Tokyo likely accelerated in December due to higher food costs and after the government’s suspension of its gas and electricity subsidies, a Reuters poll showed on Friday.
The expected recovery could prompt the Bank of Japan, which decided on Thursday to leave interest rates unchanged at 0.25%, to raise financing costs in the new year.
Tokyo’s core consumer price index (CPI), a leading indicator of nationwide price developments, was expected to rise to an annual rate of 2.5% in December, up from 2.2% in November, the average forecast of 17 economists showed.
“With the end of government subsidies for electricity and city gas, energy prices are expected to rise, causing the core CPI to rise significantly,” analysts at SMBC Nikko Securities said. The core CPI includes oil products, but excludes fresh food prices.
A higher rise in food costs, including rice, is also expected to contribute to a rise in inflation, the analysts said.
However, the government plans to revive electricity and gas price subsidies for three months from January to ease high fuel costs.
Japan’s national core CPI, which excludes fresh food but also energy products, rose 2.7% in November from 2.3% a year earlier, government data showed on Friday.
The Ministry of Interior will release the December CPI data for Tokyo on December 27 at 8:30 am Japan time (December 26 at 11:30 pm GMT).
Meanwhile, Japan’s industrial production likely shrank 3.4% in November from a month ago, the poll showed. That would follow the 2.8% gain in October.
Analysts attributed the decline in November to lower production of manufacturing machinery, such as semiconductor manufacturing equipment, compared with October, and of transportation machinery due to production cuts at a major foreign aircraft manufacturer.
The Ministry of Industry will release the factory’s production data on December 27 at 8:50 a.m. Japan time (December 26 at 2350 GMT). It will also release retail sales figures, which are expected to rise 1.7% in November from a year ago.
Japan’s unemployment rate was likely at 2.5% in November, unchanged from October, while the job-to-applicant ratio was expected to have remained at 1.25, according to the poll.
The vacancy details will be published on December 27 at 8:30 am.
(Reporting by Satoshi Sugiyama; Editing by Sam Holmes)
