Japan August imports jump as oil prices lift costs, exports stay firm

TOKYO: Japan's imports rose sharply for a third straight month in August as higher crude oil prices lifted energy costs, while exports rose for a 12th month in a row on resilient semiconductor-related demand, government data showed on Wednesday.

Total imports by value grew 28 per cent from a year earlier in August, Ministry of Finance data showed, compared with a median market forecast for a 26.3 per cent increase, as elevated crude oil prices boosted energy imports despite the yen's spike after a rare joint yen-buying intervention with the United States.

The trade figures underscore how higher energy prices are swelling import bills and fuelling inflationary pressures, reinforcing expectations the Bank of Japan will raise interest rates at the end of its two-day policy meeting on Friday.

Exports by value rose 19.3 per cent year-on-year in August, compared with economists' median forecast for an 18.2 per cent increase and following a 23.2 per cent rise in July, supported by strong chip-related shipments and higher non-ferrous metal prices.

Exports to the US rose 24.9 per cent in August from a year earlier, while those to China were up 20.6 per cent, the data showed.

Surging energy import costs kept Japan's trade balance in the red, with a deficit of 1.106 trillion yen (US$7.12 billion) in August, compared with economists' forecast for a deficit of 1.053 trillion yen.

Oil prices have risen further in recent weeks as attacks on shipping and energy infrastructure in the Middle East heightened concerns about supply disruptions, suggesting Japan's import costs could remain elevated in coming months.

Higher import costs, combined with solid exports and rising wages, could strengthen the case for additional rate hikes in the months ahead after a widely expected 25-basis-point hike on Friday, analysts said.

The BOJ may signal a faster pace of future rate hikes should price pressures heighten the risk of inflation overshooting its forecasts, sources familiar with its thinking have said.

Japan's economy has remained resilient despite the supply chain disruptions, with revised data last week showing growth in the April-June quarter was stronger than initially estimated, supported by business spending that proved more robust than previously reported.