Key facts
- Japan's imports rose 28% year-on-year in August.
- Exports increased 19.3% year-on-year in August.
- Japan recorded a trade deficit of 1.106 trillion yen ($7.12 billion) in August.
- Higher crude oil prices boosted energy import costs.
- Exports to the U.S. rose 24.9% and to China were up 20.6% in August.
Japan's imports surged 28% year-on-year in August, marking the third consecutive month of sharp increases, primarily driven by elevated crude oil prices that swelled energy costs. Despite this, exports also showed resilience, rising 19.3% for the 12th consecutive month, bolstered by strong demand for semiconductor-related products and higher non-ferrous metal prices. Exports to the U.S. increased by 24.9% and to China by 20.6% in August compared to the previous year. The persistent rise in import costs, however, kept Japan's trade balance in deficit, with the shortfall widening to 1.106 trillion yen ($7.12 billion) in August, exceeding market forecasts. This trend of higher import bills, coupled with solid exports and rising wages, is reinforcing expectations that the Bank of Japan will implement a widely anticipated 25-basis-point interest rate hike at the conclusion of its policy meeting on Friday. Sources familiar with the BOJ's thinking suggest that the central bank might signal a faster pace of future rate increases if inflation risks intensify.