Japan April consumer inflation exceeded the central bank’s 2% target

The US economy is weakening, inflation will persist

Japan’s core consumer inflation in April is expected be marginally higher than the central bank’s 2% objective, hitting a seven-year top as sharp trips in fuel and worldwide product costs push up the cost of living. Experts anticipate that shopper inflation to hover around 2% before very long as stubbornly high raw material costs force more firms to climb costs, complicating the Bank of Japan’s efforts to convince markets it will keep monetary policy ultra-loose.

Also driven by the dissipating effect of past cellphone fee cuts, the figure marks fastest pace of increase since March 2015, when the index jumped 2.2%. It follows a 0.8% rise in the previous month.

The nationwide core consumer price index (CPI), which excludes volatile fresh food costs but includes energy costs, is projected to have risen 2.1% in April from a year earlier, a Reuters poll showed.

BOJ Governor Haruhiko Kuroda has repeatedly said the central bank will be in no rush to withdraw its massive stimulus on the view that the expected cost-push rise in inflation will be temporary.

“Even if the BOJ keeps saying it will keep monetary policy ultra-loose, markets will read ahead and may start pricing in the chance of a future policy tweak,” said Naomi Muguruma, senior market economist at Mitsubishi UFJ Morgan Stanley Securities.

Some analysts disagree, arguing that public perceptions of future price moves could change sharply if the cost-driven increase in inflation persists.

Separate data is likely to show Japan suffered a trade deficit of 1.15 trillion yen ($8.9 billion) in April due to the surging cost of raw material imports, the poll showed.

It would be the ninth straight month of deficits, highlighting worsening terms of trade for a country heavily reliant on fuel and food imports.

Imports likely surged 35.0% in April from a year earlier, outpacing a 13.8% increase in exports, according to the poll.

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