Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Risks to Japan's low inflation skewed to upside, say economists: Reuters poll

EconomyApr 16, 2021 12:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A shopper wearing a protective mask pushes a shopping cart at Japan's supermarket group Aeon's shopping mall as the mall reopens amid the coronavirus disease (COVID-19) outbreak in Chiba

By Kaori Kaneko

TOKYO (Reuters) - Risks to Japan's weak inflation outlook are skewed more to the upside, according to a majority of economists polled by Reuters, as rising commodity prices, a weak yen and supply shortages brought on by the global pandemic lift input costs.

Some advanced nations have seen inflation tick up on pent-up demand, spurred by the re-opening of economies and a global increase in commodity prices.

But any pick-up in Japan's inflation will be modest as weak wage growth, a resurgence in COVID-19 infections and slow vaccine rollouts weigh on consumption, economists said.

In an April 6-14 monthly poll, 21 of 35 economists said risks to their Japan inflation outlook were skewed "more to the upside" over the coming year. The rest said risks were to the downside.

For much of the past two decades, Japan has been mired in bouts of disinflation or outright deflation that has confounded central bankers and government policymakers at every turn.

"There's upside risks to Japan's inflation because of rising commodity and oil prices, as well as the effect of a slightly weaker-than-expected yen," said Hiromichi Shirakawa, vice chairman and chief economist for Japan at Credit Suisse (SIX:CSGN). "But any rises in inflation could be temporary and moderate."

In the near-term, supply constraints, such as a shortage of semiconductors, could also put upward pressure on prices, some economists said.

Core consumer prices, which exclude volatile fresh food costs but including energy prices, will peak at 0.7% later this year, the poll showed, still far from the Bank of Japan's 2% inflation target.

For the current fiscal year that started in April, core consumer prices will rise 0.4%. That will be followed by a 0.5% increase the following year, the poll showed. Both projections were unchanged from last month.

Japan's economy contracted an annualised 5.4% in January-March, less than a 6.0% fall projected last month, and was seen rebounding 4.7% this quarter, the poll showed.

Robust exports have underpinned manufacturers' sentiment, offsetting the hit to growth from state-of-emergency curbs imposed during most of the first quarter, analysts said.

But they warned a global shortage of semiconductors could emerge as a new risk to Japan's economy.

Over 80% of economists polled said the global chip shortage could push down Japan's annualised gross domestic product (GDP) by up to 2 percentage points in April-June. A handful of economists said the chip shortage could push down growth by more than 2 points.

The economy was seen expanding 3.9% this fiscal year before slowing to growth of 1.9% next year, according to the poll.

In regards to the BOJ's monetary policy outlook, a majority of economists polled expected the central bank's next action would be an unwinding of its ultra-easy monetary policy.

"Unless a large negative shock hits the Japanese economy, the BOJ will continue with its current monetary easing," said Hiroshi Ugai, chief economist at JPMorgan (NYSE:JPM) Securities Japan.

Risks to Japan's low inflation skewed to upside, say economists: Reuters poll

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email