TOKYO (Reuters) – Consumer inflation in Tokyo appeared to have accelerated in December on higher food costs and after the government ended its gas and electricity subsidies, a Reuters poll showed on Friday.
The expected hike could prompt the Bank of Japan, which decided to keep interest rates unchanged at 0.25% on Thursday, to raise borrowing costs in the new year.
Tokyo's core consumer price index (CPI), a key indicator of national price trends, was expected to have risen to 2.5% year-on-year in December from 2.2% in November, it showed -reported by 17 economists.
“With the end of subsidies for city electricity and gas provided by the government, energy prices are expected to rise, pushing up the core CPI significantly,” said analysts at SMBC Nikko Securities. The core CPI a ' includes oil products but excludes fresh food prices.
A higher rate of increase in food costs, including rice, is also expected to increase inflation, the analysts said.
The government, however, is to revive subsidies for electricity and gas prices for three months from January to reduce high fuel costs.
Japan's national core CPI, which excludes fresh food but includes energy products, rose 2.7% in November from 2.3% a year earlier, government data showed on Friday.
The Ministry of Internal Affairs will publish Tokyo's December CPI data on December 27 at 8:30 am Japan time (December 26 at 2330 GMT).
Meanwhile, Japan's industrial output likely fell 3.4% in November from a month ago, the poll showed. That would be after a 2.8% gain in October.
Analysts attributed November's decline to lower output in production machinery such as semiconductor manufacturing equipment compared to October, and in transport machinery due to production cuts at a major overseas aircraft manufacturer.
The industry ministry will release factory output data on Dec. 27 at 8:50 a.m. Japan time (Dec. 26 at 2350 GMT). It also announces retail sales figures, which were expected to jump 1.7% in November from a year ago.
Japan's unemployment rate in November was expected to be 2.5%, unchanged from October, while the jobs-to-applicants ratio was expected to have remained at 1.25, according to the count- opinion
The jobs data will be released at 8:30 am on December 27.
(Reporting by Satoshi Sugiyama; Editing by Sam Holmes)
