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

Japan's imports surged by 28% year-on-year in August, reaching its highest level in nearly four years, as energy costs climbed due to higher oil prices, the Ministry of Finance reported on Wednesday. The largest increase since November 2022 came after crude oil import volumes rose 3.6% year-on-year and the value jumped 58.7%, despite the yen strengthening following a rare joint intervention with the United States.

Meanwhile, exports increased for a 12th consecutive month, with a 19.3% rise in August, surpassing economists' forecasts for an 18.2% increase. The surge in exports was driven by strong demand for semiconductors and higher prices for non-ferrous metals. The trade figures highlight how energy price hikes are contributing to inflationary pressures, prompting expectations of a Bank of Japan interest rate increase at the end of its two-day meeting.

Analysts warn that oil import costs may continue to rise, potentially worsening Japan's trade terms due to the lag between crude price increases and the arrival of imported goods.