Japan’s November core CPI seen steady, brisk factory output supported by global demand

By Kaori Kaneko

TOKYO (Reuters) – Japan’s consumer prices were expected to rise fractionally for an 11th straight month in November, a Reuters poll found on Friday, highlighting the reticence of consumer inflation despite the solid economy.

The nationwide core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, likely rose 0.8 percent in November from a year ago, unchanged from October’s reading, the poll of 19 economists found.

The rate of increase in utility costs slowed down, but the cost of oil products such as gasoline supported core consumer prices, analysts said.

Core consumer prices in Tokyo, available a month before the nationwide data, were projected to be up 0.7 percent in December from a year earlier versus a 0.6 percent annual increase in November.

“The contribution from energy prices to core CPI will likely stay steady in this fiscal year but it will peak in fiscal 2018,” Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities, said in the survey.

The internal affairs ministry will release consumer prices data at 8:30 a.m. Tokyo time on Dec. 26 (2330 GMT on Dec.25)

The Bank of Japan kept monetary policy steady on Thursday and Governor Haruhiko Kuroda stressed the need to “patiently” maintain ultra-loose policy, with inflation still distant from the BOJ’s 2 percent target despite a strengthening economy.

The poll also found industrial output was likely to have grown 0.5 percent in November from the previous month, up for a second straight month.

Factory output is forecast to remain solid given buoyant business sentiment and robust external demand, analysts said.

“We expect factory output will continue to recover thanks to gains in exports on the global economic recovery, upbeat corporate profits and the improving jobs market,” said Akihiro Morishige, senior economist at Mitsubishi Research Institute in the survey.

The trade ministry will announce factory output data at 8:50 a.m. Tokyo time on Dec. 28 (2350 GMT on Dec. 27)

The poll saw the jobless rate steady at a 23-year low of 2.8 percent in November and the jobs-to-applicants ratio at 1.56, which would be the highest level since January 1974.

Household spending is forecast to have risen an annual 0.5 percent in November and retail sales were seen likely to grow 1.2 percent on the year.

The internal affairs ministry will release the jobs market and household spending data on Dec. 26, while the trade ministry will publish the retail sales figures on Dec. 28.

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