(MaceNews) – Here are the key Japanese economic events for the coming week following the Bank of Japan board’s unanimous decision to raise the overnight interest rate target by 25 basis points to a 30-year high of 0.75% in light of easing uncertainties over global trade rows initiated by the Trump administration. The board also pointed to anecdotal evidence that firms are likely to continue raising wages at a relatively high pace of 5% (3% in base wages) into fiscal 2026 starting in April to address persistent labor shortages.
Japanese policymakers hope to see currently unsustainable 3% consumer inflation, reflecting a spike in food and import costs, will gradually decelerate toward the bank’s 2% price stability target in the long run without slipping back into disinflation, or worse, deflation. To that end, prices for services will have to rise at a faster place, backed by solid gains in wages and benefits, particularly regulated wages for daycare workers, caregivers and medical professionals that have constrained.
The consumer price index for Tokyo’s central 23-ward areas, a leading indicator of the national average, is forecast by economists to decelerate from the recent stable but sticky levels of just under 3% as processed food prices are on an easing trend. The core CPI (excluding fresh food) is seen up 2.5% on the year in December after the annual rate rose to 2.8% in October from September’s 2.5% and stayed at the level in November.
Among other data, factory output is set to give up some of the recent gains but the decline seems to be limited. The latest trade data showed Japanese exports are resilient despite the headwind from stiff U.S. tariffs.
– Thursday, Dec. 25
TBA – Bank of Japan Governor Kazuo Ueda delivers a brief speech on Japan’s economic and financial conditions and the bank’s policy stance at a meeting of the business lobby Keidanren in Tokyo.
Markets remain open on Christmas Day and Boxing Day in Japan.
– Friday, Dec. 26
0830 JST (2330 GMT/1830 EST Thursday, Dec. 25) The Ministry of Internal Affairs and Communications releases December Tokyo CPI, 2025 average.
Mace News median: total CPI +2.4% y/y (range: +2.1% to +2.5%) vs. Nov +2.7%; core CPI (ex-fresh food) +2.5% (range: +2.5% to +2.7%) vs. Nov +2.8%; core-core CPI (ex-fresh food, energy) +2.9% (range: +2.7% to +2.9%) vs. Nov +2.8%
Consumer inflation in Tokyo, a leading indicator of the national trend, is expected to ease back three ticks to around 2.5% in two of the three key measures in December, thanks to the recent easing trend in processed food price hikes that had seen a spike caused by protracted domestic rice supply shortages and higher import costs.
The core measure (excluding fresh food) is expected to post a 2.5% increase on the year after the annual rate rose to 2.8% in October from September’s 2.5% and stayed at the level in November. The year-on-year rise in the total CPI is also seen slowing to 2.4% from 2.7% in the previous two months. The annual rate for the core-core CPI (excluding fresh food and energy), which is little affected by fluctuations in subsided energy prices, is estimated to edge up to 2.9% from 2.8% seen the previous two months.
The acceleration in October was due mainly to higher utilities costs. The Tokyo metropolitan government had wrapped up its four-month program to wave base charges for water supply during the heat wave at the end of September, as planned.
– Friday, Dec. 26
0830 JST (2330 GMT/1830 EST Thursday, Dec. 25) The Ministry of Internal Affairs and Communications releases November jobs.
Mace News median: 2.6% (range: 2.5% to 2.6%) vs. 2.6% in previous three months, over 5-year low of 2.3% in July, 2.5% from March to June
Japanese payrolls are expected to post a 40th straight year-on-year increase in November as many firms are trying to secure qualified workers, particularly at hospitals, hotels, restaurants and technical service providers. By contrast, manufacturers and the wholesale/retail sector continue to show a decline in employment.
The seasonally adjusted unemployment rate is forecast to remain stable at 2.6% after being flat in the previous two months. rising to the level in August and hitting a more than five-year low of 2.3% in July.
The jobless rate has stayed in a tight 2.3% to 2.6% range this year. The 2.3% rate in July is the lowest since 2.2% recorded in December 2019 in the early phase of the pandemic.
The government continues to describe employment conditions as “showing signs of improvement” in its latest monthly economic report for December, unchanged since the last upgrade in June 2023.
– Friday, Dec. 26
0850 JST (2350 GMT/1850 EST Thursday, Dec. 25) The Ministry of Economy, Trade and Industry releases November industrial production, outlook for December and January.
Mace News median: -1.3% m/m (range: -2.5% to +0.5%) vs. Oct. revised up to +1.5% from +1.4%; -1.0 y/y (range: -2.0% to +1.0%) vs. Oct revised up to +1.6% from +1.5%
Japan’s industrial production is projected to slip back 1.3% on the month in November for the first dip in three months and a sixth decline this year, taking a breather after having climbed to a nearly two-year high in October with a 1.5% rise (revised up from 1.4%) and showing some resilience against the headwind of the protectionist U.S. trade policy.
Trade data showed last week that Japan’s export values posted the third straight rise in November, up 6.1% on year, thanks to recovering demand from Europe and Asia as well as a rebound in shipments to the key U.S. market but stiff U.S. import duties continue to dent overall Japanese auto exports. On the bright side, export volumes marked their first rise gain in four months, up 0.5% on year.
The monthly survey by the Ministry of Economy, Trade and Industry released last month indicated that output dip 2.6% in November before slipping a further 2.0% in December as the drag from high tariffs on autos and metals is emerging in the final quarter of 2025.
Last month, the ministry repeated that industrial output was “taking one step forward and one step back.” The last change was made in the July 2024 report, when it upgraded its view.
From a year earlier, factory output is also expected to slip back, by 1.0%, after rising a revised 1.6% in October for a second straight gain.
– Friday, Dec. 26
0850 JST (2350 GMT/1850 EST Thursday, Dec. 25) The Ministry of Economy, Trade and Industry releases November retail sales.
Mace News median: +0.7% y/y (range: -0.5% to +0.9%) vs. Oct +1.7%; +0.5% m/m (range: +0.2% to +0.5%) vs. Oct +1.6%
Japanese retail sales are forecast to have risen a modest 0.7% on year in November for a third straight increase after rising 1.7% in October, led by sustained strong demand for drugs and cosmetics as well as solid sales at department stores.
Industry data due on Dec. 25 was expected to show that department store sales recorded a fourth straight year-on-year increase in November as cold weather propped up sales of winter clothing. The “general merchandise” category in retail sales data, however, marked its ninth year-on-year decline in September as it includes sales at both department store chains and supermarkets.
On the month, retail sales are also expected to show a meager 0.5% rise on a seasonally adjusted basis after rising 1.6% the previous month.
Last month, the Ministry of Economy, Trade and Industry maintained its assessment, saying retail sales “have a weak undertone.” In the September report, it revised down its view for the first time in four months. It was the second downgrade this year.
AloJapan.com