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

TOKYO: Japan posted its largest increase in imports in nearly four years in August as higher oil prices lifted energy costs, while exports rose for a 12th month on resilient semiconductor-related demand, government data showed on Wednesday.

Total imports by value grew 28% from a year earlier in August, the largest increase since November 2022, Ministry of Finance data showed, as elevated crude oil prices boosted energy imports despite the yen’s spike after a rare joint yen-buying intervention with the United States.

That compared with a median market forecast for a 26.3% increase.

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% year-on-year in August, compared with economists’ median forecast for an 18.2% increase and following a 23.2% rise in July, supported by strong chip-related shipments and higher non-ferrous metal prices. Crude oil import volumes rose 3.6% from a year before, while the total value jumped 58.7%.

“Oil import costs could increase further from September onward, leading to a further deterioration in Japan’s terms of trade, given the roughly two-month lag before higher crude prices are reflected in imports arriving at Japanese ports,” said Koki Akimoto, an economist at the Daiwa Institute of Research.

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

Oil slips on US stock build, Middle East disruptions limit losses

Surging energy import costs kept Japan’s trade balance in the red, with a deficit of 1.106 trillion yen ($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 to over $100 a barrel as attacks on shipping and energy infrastructure in the Middle East have 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 even after the BOJ is widely expected to announce a 25-basis-point hike on September 18, 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 to June quarter was stronger than initially estimated, supported by business spending that proved more robust than previously reported.