Japan October consumer inflation edges up, trade gap narrows

Japan's consumer price inflation edged higher in October, with all key measures accelerating slightly, official data showed Friday.

According to the Statistics Bureau of Japan, the national consumer price index rose to 3.0% in October, up from 2.9% in September.

Core CPI, which excludes volatile fresh food prices, increased to 3.0% in October from 2.9% in the previous month, matching the consensus forecast cited by FXStreet.

Meanwhile core CPI excluding fresh food and energy rose to 3.1% in October from 3.0% in September.

Min Joo Kang, ING senior economist, South Korea and Japan, said: "Typically, companies adjust final prices in October, and they are clearly passing increased input costs on to consumers. This development is likely welcomed by the Bank of Japan, which seeks a virtuous cycle between solid wage growth and sustained inflation."

The CPI is calculated using a basket of goods and services that reflect household consumption expenditure in Japan.

On the same day, provisional figures from the Ministry of Finance showed trade deficit narrowed in October as export growth outpaced an increase in imports.

Japan's trade deficit narrowed to JPY231.77 billion in October, approximately USD1.47 billion, from JPY499.95 billion deficit in the same month a year earlier.

The trade deficit also narrowed month-on-month from JPY237.36 billion in September, surpassing the FXStreet consensus forecast of a JPY280 billion deficit.

Imports rose 0.7% year-on-year in October, surpassing the 0.7% decline that was forecast, while exports grew 3.6%, ahead of the expected 1.1% rise.

"Although Japan reached a trade deal with the US, exports to the US were still down 3.1%. However, the contraction has moderated compared to the previous quarter. The most notable drop came from car exports and iron and steel.

"Exports to other regions rose, more than offsetting weak US exports...We believe that solid global semiconductor demand and AI investment support intra-regional trade," ING's Kang added.