(C) Reuters. FILE PHOTO: A laborer works in a container area at a port in Tokyo
By Leika Kihara and Kaori Kaneko
TOKYO (Reuters) – Japan’s consumer prices are expected to fall in April for the first time in more than three years and exports likely mark their biggest drop in more than a decade, a Reuters poll showed, as the coronavirus pandemic inflicts deeper pain on the economy.
The bleak data will underscore the challenge Japanese policymakers face in balancing the need to contain the virus, and restarting parts of the economy that is already on the cusp of a deep recession.
The nationwide core consumer price index (CPI), which excludes volatile fresh food prices but includes oil costs, is forecast to have slipped 0.1% in April from a year earlier, according to analysts polled by Reuters.
The decline, which would be the first year-on-year fall since December 2016, follows a 0.4% gain in March.
“Japan likely saw demand shrink as consumer activity was constrained by the government’s decision in mid-April to extend the state of emergency nationwide,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
Trade balance data is also likely to show that exports in April fell 22.2% from a year earlier after an 11.7% fall in March, the poll showed. That would be the steepest drop since a 23.2% decline in October 2009.
Core machinery orders, a leading indicator of capital expenditure, in March probably fell 7.1% from the previous month, the poll showed, a sign that uncertainty over the depth of the pandemic is discouraging firms from ramping up spending.
The government is due to release CPI data at 8:30 a.m. on May 22, trade balance data at 8:50 a.m. on May 21 and the machinery orders data at 8:50 a.m. on May 20.
The world’s third-largest economy is on the cusp of a deep recession as the pandemic paralyses business activity and global trade. Japan has reported close to 16,000 coronavirus infections and over 650 deaths.
On Friday, data showed Japan’s wholesale prices declined at the fastest annual pace in nearly four years in April, adding to fears the country may slip back into deflation as the pandemic wreaks havoc on the economy.
Pandemic to depress Japan consumer prices, batter exports: Reuters poll
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