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Japan May import growth likely hit 6-month high on commodity rally, weak yen

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A cargo ship and containers are seen at an industrial port in Tokyo

Rising import costs are inflicting increasing pain on Japanese households and domestic-oriented firms, raising questions about the central bank’s stance that the weak yen is beneficial to the economy overall.

Imports by value likely jumped 43.6% in May from a year earlier, marking the biggest rise in a single month since November and accelerating from April’s 28.2% increase, the poll of 17 economists showed.

“Rising oil prices and a falling yen swelled up imports,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

Yen-based imported goods prices soared a record 43.3% year-on-year in May, Bank of Japan data showed on Friday.

The poll showed exports likely grew 16.4% in May, slightly faster than April’s 12.5% rise.

But the larger surge in imports was forecast to widen the May trade deficit to 2.022 trillion yen ($15.08 billion), coming close to the largest one-month gap in eight years posted in January.

“The main culprit behind a widening trade gap would rather be exports, which could have grown faster,” Tsunoda said, adding shipments of cars and other manufacturing goods likely suffered from supply bottlenecks due to China’s COVID-19 lockdowns.

The poll also found core machinery orders, a leading indicator of capital expenditure, were expected to drop 1.5% month-on-month in April after rising 7.1% in March.

The government will release the trade figures at 8:50 a.m. on June 16 (2350 GMT, June 15) and the machinery orders data at 8:50 a.m. on June 15 (2350 GMT, June 14).

($1 = 134.0800 yen)

(Reporting by Kantaro Komiya; Editing by Kim Coghill)

By Kantaro Komiya

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