Japan's core consumer inflation likely to hit 8-year high in September

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Japan's core consumer inflation likely to hit 8-year high in September

The Reuters poll showed that Japan's core consumer inflation rate is likely to hit an eight-year high in September, as firms tried to offset high raw material costs and a sliding yen by hiking their prices.

The trade deficit is expected to come in at nearly $15 billion in September, as the yen's decline this year has swelled import costs, according to the poll.

The Japanese currency slid to a 32 year low against the U.S. dollar this week.

The consumer price index CPI, which excludes volatile fresh food prices but includes energy, went up 3.0 per cent year-on-year in September.

The rise in the price of food, such as confectionary products and prepared foods, was the main driver behind the increase, said Rikuto Minami, an analyst at Mizuho Research Technologies.

The forecast strongly suggested that the core CPI would stay above the central bank's 2 per cent inflation target for a sixth consecutive month.

The Bank of Japan will hold its next policy meeting on October 27 -- 28. It has kept its short-term interest rate target at 0.1 per cent and maintained its promise to guide 10 year government bond yields around 0 per cent despite widening price pressures, bucking a global trend of aggressive policy tightening.

Governor Haruhiko Kuroda has repeatedly pledged to keep the BOJ's stimulus effort intact, because any cost-push rise in inflation would be temporary.

According to the poll, Japan suffered a trade deficit of 2.167 trillion yen $14.70 billion in September due to high import costs that are being exacerbated by the weakening yen.

It would be the 14th month of deficits and follow a record 2.817 trillion yen shortfall in August. Imports by value went up by 45.0 per cent in September from a year earlier in the year, beating a 27.1 per cent rise in exports, the poll showed.