Inflation in Tokyo likely to increase with suspended energy subsidies: Reuters poll by Reuters
TOKYO (Reuters) – Consumer inflation in Tokyo is likely to rise in December due to higher food costs and after the government halted its gas and electricity subsidies, a Reuters poll said on Friday.
The expected takeover could prompt the Bank of Japan, which decided to keep interest rates unchanged at 0.25% on Thursday, to raise borrowing costs in the new year.
The core consumer price index (CPI) in Tokyo, the leading indicator of price trends across the country, was expected to rise to 2.5% year-on-year in December from 2.2% in November, the median forecast of 17 economists showed.
“With the end of subsidies for city electricity and gas provided by the government, electricity prices are expected to increase, pushing up the core CPI,” SMBC Nikko Securities analysts said. The core CPI includes oil products but excludes fresh food prices.
The high rate of increase in food costs, including rice, is expected to contribute to inflation, analysts said.
The government is determined to renew the subsidy on the price of electricity and gas for three months from January in order to reduce the cost of fuel.
Japan’s nationwide CPI, which excludes fresh food but includes energy, rose 2.7% in November from 2.3% a year earlier, government data showed on Friday.
The Ministry of Internal Affairs releases December Tokyo CPI data on Dec. 27 at 8:30 am Japan time (Dec. 26 at 2330 GMT).
Meanwhile, Japan’s industrial output is likely to have slipped 3.4% in November from the previous month, the survey said. That would follow October’s 2.8% gain.
Analysts attributed the drop in November to lower output in manufacturing equipment such as semiconductor manufacturing equipment compared to October, and in transportation equipment due to reduced production at a major overseas aircraft manufacturer.
The industry department releases factory output data on Dec. 27 at 8:50 am Japan time (Dec. 26 at 2350 GMT). It will also announce retail sales figures, which were expected to fall 1.7% in November from last year.
Japan’s unemployment rate in November was likely to be 2.5%, unchanged from October, while the job-to-claims ratio was expected to remain at 1.25, according to the poll.
Jobs data will be published at 8:30 am on Dec. 27.
