This photo illustration taken on Sept 24, 2022 shows Japanese 10,000 yen notes on display in Tokyo. (RICHARD A. BROOKS / AFP)

TOKYO - Japan's current account surplus shrank to its smallest amount on record for the month of August, Ministry of Finance data showed on Tuesday, with surging prices of energy imports outstripping price rises in exports and draining national wealth.

The surplus stood at 58.9 billion yen (US$404.45 million), smaller than economists' median forecast of 121.8 billion yen in a Reuters poll. On a seasonally adjusted basis, the account was in a deficit for a second month, at 530.5 billion yen.

Continual trade surplus in the past and growing overseas investment means Japan has never recorded a current account deficit on an annual basis. But a worsening trade balance has left the surplus shrinking for four consecutive fiscal years.

The current account surplus has long been regarded as a sign of export might and source of confidence in the safe-harbor yen, yet recent years have seen the account occasionally swing to deficit on a monthly basis

"What's happening now is a shift of income from commodity-importing nations such as Japan toward commodity-exporters," said Masamichi Adachi, chief economist at UBS Securities. "I think the current account surplus will narrow as trade deficits persist, eroding Japan's purchasing power and making it poorer."

READ MORE: Japan to curb electricity costs amid weak yen, recession risks

The current account surplus has long been regarded as a sign of export might and source of confidence in the safe-harbor yen, yet recent years have seen the account occasionally swing to deficit on a monthly basis.

While the cost of imports rise as the yen weakens, the attendant boost to exports that become cheaper to foreign buyers has not been as great due to firms shifting production abroad - a consequence of a previously strong yen making exports pricey.

ALSO READ: Japan spent record of nearly $20b to support the yen

Japan offsets trade deficits with returns from a growing number of overseas investments - its primary income balance clocked a record 3.327 trillion yen in August, helped by a weak yen. But a worsening balance of payments highlights structural economic change and runs against Japan's trade powerhouse image.

Policymakers are also becoming increasingly concerned of a weak yen driving up import bills and households' cost of living due to a heavy reliance on fuel and food imports.