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The
core consumer prices index (CPI) is expected to decelerate to
2.2% from 2.6% in March, the lowest level in three months, but
still at or above the central bank's 2% target for more than two
years.
The data will be key to further decisions on rate hikes by the
Bank of Japan (BOJ), which wants to push interest rates higher
albeit gradually, saying it should keep accommodative conditions
for the time being due to a fragile economy.
The BOJ raised interest rates in March for the first time since
2007 in a landmark shift away from negative rates. Now, the
central bank is coming under pressure from some lawmakers to
raise rates further to cushion a blow from the yen's rapid
weakening to levels unseen since 1990.
The CPI data, which excludes fresh food but includes oil
products, will be released by the ministry of internal affairs
and communications on Friday, May 24.
Government data on Thursday showed the Japanese economy
contracted 2% annualized in the first quarter, with domestic
consumption hit hard by rising living costs due to the weak yen
and with a 5% slump in exports of goods and services.
Weak exports are a source of concern for the trade-reliant
Japanese economy, which counts on external demand to offset weak
domestic consumption.
Analysts polled by Reuters expect Japan's exports grew 11.1% in
April from a year earlier, accelerating from March's 7.3% gain,
thanks in part to the boost in value to shipments from the weak
yen.
Imports also probably rose 9.0% in April year-on-year, swinging
from an annual 5.1% decline in the previous month. As a result,
the trade balance, or exports minus imports, swung to a deficit
of 339.5 billion yen ($2.18 billion), the trade data is expected
to show on Wednesday, May 22.
Highlighting soft domestic demand, core machinery orders, a key
gauge of capital expenditure in the next six to nine months,
will probably show a decline of 2.2% in March, swinging from
7.7% growth in the previous month.
On a year-on-year basis, core orders probably rose 2.3% in March
from a 1.8% decline in the previous month.
($1 = 155.8700 yen)
(Reporting by Tetsushi Kajimoto; Editing by Sonali Paul)
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