Japan ran its biggest single-month trade deficit on record in August as imports surged on high energy costs and a slump in the yen, exposing the economy's vulnerability to external price pressures.
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The growing trade deficit highlights the fragile nature of Japan's economic recovery which has so far largely remained intact despite a high price tag firms are paying for imports that is aggravated by the yen's slide to a 24-year low and rising prospects of a global slowdown.
Imports jumped 49.9 per cent in the year to August, driven by costs of crude oil, coal and liquefied natural gas (LNG), and causing the trade deficit to swell to 2.8173 trillion yen ($19.71 billion), the biggest shortfall on record.
The gain in imports was bigger than a median market forecast for a 46.7 per cent rise in a Reuters poll and outstripped a 22.1 per cent year-on-year increase in exports in the same month, the Ministry of Finance data showed.
"Imports are on the rise as high raw material prices continued and supply disruptions eased, while exports are sluggish," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"Costs will rise if imports go up without any change to the size of the global economy. It will lead to the importing of inflation."