theglobalsun – Japan core inflation likely slowed in February as the government reinstated energy subsidies, easing pressure on household budgets. A Reuters poll of 18 economists estimated that the core Consumer Price Index (CPI). Which includes oil products but excludes fresh food, rose 2.9% from a year earlier. This marks a decrease from January’s 3.2% growth, reflecting the impact of the government’s intervention in energy pricing.
Analysts at SMBC Nikko Securities noted that while oil product prices continue to climb, the energy subsidy program had a stronger effect in lowering electricity and city gas costs. Meanwhile, a separate inflation measure—excluding both fresh food and fuel—remained steady at 2.5%, aligning with the Bank of Japan’s (BOJ) key inflation gauge.
Japan Policymakers Remain on Track for Rate Hike
Despite the temporary slowdown in inflation. The BOJ is expected to proceed with its plans to raise interest rates later this year. Market analysts anticipate a rate hike in the third quarter, as inflation remains above the central bank’s 2% target.
The BOJ’s decision-making process is also influenced by global economic factors, including U.S. President Donald Trump’s economic policies. The internal affairs ministry will release official CPI data on March 21 at 8:30 a.m. local time (March 20, 11:30 p.m. GMT).
Meanwhile, Japan’s exports showed strong growth, with February shipments expected to have risen by 12.1% year-on-year, up from 7.2% in January. This suggests continued demand for Japanese goods, supporting economic stability amid ongoing inflationary pressures.
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Exports Rise While Imports Slow in February
Japan’s trade surplus expanded to 722.8 billion yen ($4.88 billion) in February, driven by a moderate rise in exports and a sharp slowdown in import growth. According to estimates, exports increased by 12.1% year-on-year, building on January’s 7.2% rise. Meanwhile, imports edged up by just 0.1%, a significant drop from the 16.7% increase recorded in January.
Economist Takeshi Higashifukasawa from Mizuho Research & Technologies noted that the end of the yen’s depreciation and higher crude oil prices contributed to slowing import growth. He also pointed out that February’s figures reflect a reaction to January’s import surge.
Yen Strengthens as Markets Anticipate Bank of Japan Rate Hikes
The yen has shown signs of recovery against the U.S. dollar, trading at 148.25 on Friday morning in Tokyo. This marks a rebound from last year’s three-decade low of nearly 162. Analysts attribute this strengthening to growing market expectations that the Bank of Japan (BOJ) will continue raising interest rates. Meanwhile, the U.S. Federal Reserve remains on track for gradual rate cuts.
Machinery orders, a key indicator of capital investment over the next six to nine months. It likely fell by 0.5% in January, following a 1.2% decline in December. The government will release official trade and machinery order data on March 19 at 8:50 a.m. local time (March 18, 11:50 p.m. GMT)..
