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Nikkei Asia
8 hours ago
- Business
- Nikkei Asia
South Korea votes, Switch 2 launch, ispace's second moonshot
Welcome to Your Week in Asia. After months of political upheaval, voters in South Korea will be looking ahead to a hopefully calmer era when they go to the polls in a presidential election on Tuesday, even as many issues and challenges remain. Also this week, the stakes are high for video gaming giant Nintendo as it releases the long-awaited successor to its blockbuster Switch console. Get the best of our coverage of Asia and much more by following us on X, @NikkeiAsia. We are also now on Bluesky. Our handle is @ SUNDAY Thailand begins Pride month Bangkok will host its first Pride parade since Thailand's same-sex marriage law took effect on Jan. 23. The subsequent month of festivities in the capital and beyond is expected to boost both tourism and retail. TUESDAY South Korea chooses next president South Koreans will vote in a snap election, hoping to settle a chaotic six months sparked by now-impeached President Yoon Suk Yeol's declaration of martial law. Polls show left-leaning candidate Lee Jae-myung has a comfortable lead in the race to become president. Voters are seeking a leader who can inject life into the sluggish economy and restore order to the nation's politics. BOJ governor speaks amid bond market jitters Bank of Japan Gov. Kazuo Ueda will speak at a meeting held by research institute Naigai Josei Chosa Kai, while his deputy, Shinichi Uchida, is set to address the Japan Society of Monetary Economics on Saturday. Market participants will be watching closely amid turbulence in the bond market, dissecting the officials' speeches for any policy hints ahead of the BOJ's next meeting, when it will release an interim assessment of a planned reduction in government bond purchases. WEDNESDAY Tiananmen Square protests anniversary Wednesday marks 36 years since the deadly crackdown on pro-democracy protesters in Beijing in 1989, with memorials expected in Taiwan and elsewhere. In Hong Kong, the candlelight vigil at the city's Victoria Park, which used to attract thousands of citizens before the imposition of a national security law in 2020, will not be held. THURSDAY Nintendo launches the Switch 2 Japan's Nintendo launches the eagerly anticipated successor to the smash-hit Switch console, which started selling in 2017. The Switch 2 has a larger screen, a new controller and added features such as a voice chat function. Nintendo expects to shift 15 million units in the financial year ending next March. U.S. trade figures The United States will publish its foreign trade data for April, when U.S. President Donald Trump unveiled sweeping tariffs on nearly all trading partners. Trade figures with Asian countries are expected to have slumped despite a 90-day pause on most tariff rates. Data: Philippines inflation, Singapore retail sales index FRIDAY Japan's ispace makes second moon-landing attempt Japanese startup ispace will make a second attempt at a soft landing on the moon, aiming to become the first Asian private company to achieve such a feat. Its first attempt, in April 2023, ended with the lander crashing into the lunar surface. Reserve Bank of India meets The Reserve Bank of India is expected to reduce interest rates for a third consecutive policy meeting, with inflation remaining below the central bank's target. Slowing economic growth is viewed as increasing the likelihood of a cut. Data: Vietnam trade, foreign direct investment and inflation SATURDAY Prabowo heads to Russia Indonesian President Prabowo Subianto is scheduled to visit Moscow for a meeting with his Russian counterpart, Vladimir Putin. He will also attend the St. Petersburg International Economic Forum as a keynote speaker. Prior to taking office in October 2024, Prabowo visited the Russian capital as Indonesia's minister of defense and president-elect.
Yahoo
2 days ago
- Business
- Yahoo
BOJ's Ueda calls for vigilance over food inflation risks
By Leika Kihara TOKYO (Reuters) -The Bank of Japan must be vigilant to the risk rising food prices could push up underlying inflation that is already near its 2% target, Governor Kazuo Ueda said, signaling the central bank's readiness to continue its rate hikes. The BOJ keeps interest rates low as inflation expectations, or the public's perception on future price moves, stand between 1.5% and 2% - the highest in 30 years though still below its 2% target, Ueda said in a speech at a BOJ-hosted conference. But a renewed rise in food prices, particularly a 90% spike in the price of rice, is pushing up not just headline but underlying inflation, which is typically influenced mostly by improvements in the economy and a tight job market, Ueda said. "Our baseline view is that the effects of food price inflation are expected to wane," he said. "However, given that underlying inflation is closer to 2% than a few years ago, we need to be careful about how food price inflation will impact underlying inflation," he added. The remarks come as the BOJ closely monitors economic risks from higher U.S. tariffs as well as domestic inflationary pressures, in judging how soon to resume interest rate hikes. Although the BOJ downgraded its forecasts due to trade policy uncertainties, it expects underlying inflation to gradually move toward its 2% target over the second half of its forecast horizon running through fiscal 2027, Ueda said. "To the extent that incoming data allows us to gain more confidence in the baseline scenario, as economic activity and prices improve, we will adjust the degree of monetary easing as needed" by raising rates, he said. SUPPLY-SIDE CHALLENGES Japan's core inflation hit 3.5% in April, accelerating at its fastest annual pace in more than two years due largely to a 7% surge in food costs, raising the odds of another rate hike this year. But the central bank has signaled the need to go slow in raising rates to ensure Japan sees inflation durably hit 2% backed by robust domestic demand and steady wage hikes, rather than rising raw material costs. Stubbornly high food prices, blamed largely on rising import costs, have complicated the BOJ's rate decisions by simultaneously hurting consumption and keeping headline inflation well above its target. While central banks typically look through the impact of supply shocks on inflation, that approach was criticised by academics as flawed after U.S. and European central banks were forced to hike rates aggressively after being caught off guard by a spike in inflation caused by Russia's invasion of Ukraine. "I think we have concentrated too much in policy instruments that (work) through the aggregate demand side," Agustin Carstens, General Manager of the Bank for International Settlements (BIS), told the same conference. "Now, we have to work more" in understanding supply-side factors that affect inflation, he added. The BOJ ended a decade-long, massive stimulus programme last year and in January raised short-term interest rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target. While the central bank has signalled readiness to raise rates further, the economic repercussions from higher U.S. tariffs forced it to cut its growth forecasts and complicated decisions around the timing of the next rate increase. A Reuters poll, taken on May 7-13, showed most economists expect the BOJ to hold rates steady through September with a small majority forecasting a hike by year-end. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Times
3 days ago
- Business
- Business Times
Tokyo prices rising most in two years, keeps BOJ on hike path
PRICES in Tokyo jumped the most in two years on surging food costs, keeping the Bank of Japan on track for another rate hike in coming months. Consumer prices excluding fresh food rose 3.6 per cent in the capital in May from a year earlier, accelerating from 3.4 per cent in April, the Ministry of Internal Affairs said on Friday. The increase, which outpaced economists' median forecast of a 3.5 per cent gain, was the biggest since January 2023. Overall inflation came to 3.4 per cent, matching a revised 3.4 per cent in April. The readings were partly distorted by policy-related factors, including the fading impact of last year's school fee cuts. While Tokyo's CPI figures serve as a leading indicator for national inflation trends, the high school subsidies were in effect only in the capital. A main driver in the latest figures was prices for foods other than fresh produce, for which gains accelerated to 6.9 per cent from 6.4 per cent in the previous month. Gains in rice prices held roughly steady at 93.7 per cent. Food price hikes 'have pushed down real wages, which is negative for the economy. From a monetary policy perspective, the BOJ likely views it as stronger than on track,' said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Against the backdrop of recent trends, the latest price data will likely keep the BOJ on track for another rate increase in coming months. Figures last week showed that national inflation has stayed at or above the BOJ's 2 per cent target for three years, and Governor Kazuo Ueda said this week that the bank is closer to achieving its target than at any other time in the last three decades. The BOJ warned of potential spillover effects from hot prices for food in its latest Outlook, saying, 'With regard to the recent rise in food prices, such as rice prices, even when price rises themselves mainly result from weather conditions, attention is warranted on the possibility that these rises may induce second-round effects on underlying CPI inflation through changes in household sentiment and inflation expectations.' The BOJ next sets policy at the end of a two-day meeting on June 17, when it's widely expected to leave interest rates unchanged while updating guidance on plans to scale back its government bond purchases. Markets anticipate the bank will continue its gradual quantitative tightening beyond April 2026. The food price gains are a worrisome sign for Prime Minister Shigeru Ishiba ahead of a summer election expected to be held by July. Persistent increases in living costs have fueled public discontent in Japan, weighing heavily on support for Ishiba, whose approval rating has fallen to its lowest level since he took office in October. A majority of surveyed respondents cited economic issues as their top concern. Newly appointed Agriculture Minister Shinjiro Koizumi has pledged to halve the price of the staple grain to around 2,000 yen per 5 kg. To achieve this, the government is in the process of releasing 300,000 tons of stockpiled rice into the market at a fixed wholesale price of about 10,000 yen per 60 kg. Market participants have responded favourably to initial steps on that front. The government has also taken other steps to soothe voters, unveiling a 900 billion yen stimulus package this week that will be funded through existing budget allocations and reserve funds. The package includes the reinstatement of utility subsidies from July through September. Energy prices weighed on the CPI gauge in May, with electricity price growth slowing to 10.8 per cent from 13.1 per cent. Service price growth picked up to 2.2 per cent. The data are in line with the central bank's assessment in its latest Outlook that the economy has recovered moderately with pockets of weakness. A key risk obscuring the economic outlook remains US trade policies. Ishiba and President Donald Trump spoke by phone for the second time in a week on Thursday as Japan's premier pressed his case for exemptions from tariffs. Japan currently faces a 25 per cent tariff on cars, steel, and aluminum, alongside a 10 per cent levy on all other goods that's set to rise to 24 per cent in early July barring a trade agreement. Japan's chief trade negotiator Ryosei Akazawa will meet with his US counterparts in Washington later Friday. Questions over the tariffs could deter the BOJ from hiking rates in the near term, according to Maruyama. 'Just because inflation is on track doesn't automatically mean the bank can raise interest rates — it still needs to assess tariff impacts,' he said. 'Prices being on track is definitely a necessary condition, but I don't think it's enough on its own to determine the timing of a decision.' Reflecting early signs of business anxiety, Japan's industrial production fell 0.9 per cent in April from the previous month, according to the Industry Ministry. Economists had estimated a 1.4 per cent decline. Manufacturers expect a 9 per cent gain in output this month. In other data on Friday, the jobless rate stood at 2.5 per cent in April, the same as in the previous month, according to the Ministry of Internal Affairs. The job-to-applicant ratio held at 1.26, meaning there were 126 jobs available for every 100 job seekers, the Labor Ministry reported separately. Continued labour-market tightness is expected to keep upward pressure on wages as firms compete to hire and retain workers. That could help sustain a virtuous cycle of wage and price growth — a central aim of both the government and the BOJ as they pursue their respective policy strategies. Household sentiment remains fragile amid inflation and economic uncertainty. A separate report from the Industry Ministry showed that retail sales rose 0.5 per cent in April from the previous month. BLOOMBERG
Yahoo
3 days ago
- Business
- Yahoo
Tokyo CPI steady in May, core inflation rises past expectations to over 2-yr high
Tokyo consumer price index inflation cooled slightly in May, while core inflation rose past expectations to an over two-year high– a trend that gives the Bank of Japan more impetus to raise interest rates. Tokyo core CPI, which excludes volatile fresh food prices, rose 3.6% year-on-year in May, government data showed on Friday. The reading was higher than expectations of 3.5% and picked up from the 3.4% seen in the prior month, while also touching its highest level since early-2023. A core reading that excludes both fresh food and energy prices rose to 3.3% y-o-y in May from 3.1% in the prior month. The print is closely watched as a gauge of underlying inflation by the BOJ, and remained well above the central bank's 2% target. Headline Tokyo CPI was steady at 3.4% in May. Tokyo inflation usually acts as a bellwether for nationwide Japanese inflation, given the region's economic dominance in the country. Friday's data adds to bets that the BOJ will have more impetus to raise interest rates soon, especially with a persistent pick-up in Japanese inflation. Friday's data also comes just a week after CPI data showed a bigger-than-expected pick-up in nationwide inflation in April, which added to bets that the BOJ will hike in Japan. The central bank is expected to raise interest rates by at least 25 basis points in July, amid a steady pickup in inflation. Core inflation has also trended well above the bank's 2% annual target. Strong Japanese inflation comes amid a sharp pick-up in wages through 2024 and 2025, as labor unions clinched two straight years of bumper wage hikes during springtime negotiations. This trend is expected to temporarily boost private consumption, supporting the Japanese economy but also underpinning inflation. Related articles Tokyo CPI steady in May, core inflation rises past expectations to over 2-yr high Japan CPI grows more than expected in April as wage hikes boost spending Japan manufacturing PMI shrinks for 11th straight month in May on trade headwinds Sign in to access your portfolio
Yahoo
3 days ago
- Business
- Yahoo
Core inflation in Japan capital hits 2-year high, keeps rate hike chance alive
By Leika Kihara TOKYO (Reuters) -Core inflation in Japan's capital hit a more than two-year high on persistent rises in food costs, data showed on Friday, keeping the central bank under pressure to hike interest rates further. But factory output slid in April in a sign manufacturers are feeling the pinch from slowing global demand, highlighting the dilemma the Bank of Japan faces in balancing inflationary pressures and the hit to the economy from steep U.S. tariffs. The Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, rose 3.6% in May from a year earlier, exceeding market forecasts for a 3.5% gain and perking up from a 3.4% rise in April. It was the fastest annual pace of increase since January 2023, when it hit 4.3%. Core inflation in Tokyo, seen as a leading indicator of nationwide price trends, thus exceeded the BOJ's 2% target for three straight years. A separate index that strips away the effects of both fresh food and fuel costs, closely watched by the BOJ as a broader price trend indicator, rose 3.3% in May from a year earlier after a 3.1% rise in March. "The Tokyo CPI showed a further broad-based acceleration in inflation, which suggests that the BOJ may hike even earlier than our current forecast of October," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. A Reuters poll, taken on May 7-13, showed most economists expect the BOJ to hold rates steady through September with a small majority forecasting a hike by year-end. MORE PRICE HIKES COMING Sticky food inflation remained the main driver of the rise with non-fresh food prices up 6.9% in May from a year earlier and the cost of rice soaring 93.2%. But services inflation also accelerated to 2.2% in May from 2.0% in April, suggesting companies were gradually passing on rising labour costs. "The fact services prices rose is positive for the BOJ, which wants to keep alive expectations of further rate hikes," said Masato Koike, senior economist at Sompo Institute Plus. "But U.S. policy uncertainty will make it hard to keep the BOJ from hiking too soon. By the time the dust settles, price developments could have changed in a way that makes rate hikes difficult," he added. Many analysts expect consumer inflation to slow in coming months as falling crude oil prices and the drop in import costs from the yen's rebound. The hit to exports from U.S. tariffs and slowing global demand could also hurt Japanese manufacturers' profits and discourage them from raising wages next year. Separate data released on Friday showed Japan's factory output fell in April by 0.9% from the previous month. Manufacturers surveyed by the government expect output to increase 9.0% in May and drop 3.4% in June, the data showed. But food inflation may not allow the BOJ to pause on rate hikes for too long. Japanese firms plan to hike prices for 1,932 food and beverages in June, triple the number from a year ago, a survey by private think tank Teikoku Databank showed on Friday. BOJ Governor Kazuo Ueda told parliament on Friday the central bank was mindful that companies continued to actively hike wages and raise prices to pass on higher costs. "Japan may face a tricky situation where public attention to rising food prices heighten inflation expectations, which have so far been stable," said Tsutomu Watanabe, an academic at the University of Tokyo's graduate school of economics. The BOJ ended a massive stimulus programme last year and in January raised short-term rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target. While the central bank has signalled readiness to raise rates further, the economic repercussions from higher U.S. tariffs forced it to cut its growth forecasts and complicated decisions around the timing of the next rate increase. Sign in to access your portfolio
