Japan’s Wholesale Inflation Slows Sharply in Sign of Waning Cost Pressures

REUTERS/Androniki Christodoulou/File Photo
A woman looks at items at a shop in Tokyo, Japan, March 24, 2023.

TOKYO (Reuters) – Japanese wholesale inflation slowed below 1% for the first time in just over 2-1/2-years, data showed on Monday, a sign that cost push pressures that had been driving up prices for a wide range of goods were starting to fade.

The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, increased 0.8% in October from a year earlier, roughly matching a median market forecast for a 0.9% gain but cooling significantly from a 2.2% rise in September.

That marked the 10th straight month of slowing wholesale inflation with the year-on-year growth rate coming in below 1% for the first time since February 2021, the data showed.

The slowdown was due to declines in prices for wood, chemical and steel products, the data showed, highlighting the impact of falling global commodity costs.

The spike in wholesale inflation has prodded many Japanese firms to pass on higher costs to households, a trend that led the Bank of Japan to upgrade its inflation forecasts in quarterly projections released in October.

But the BOJ has said the recent cost-push inflation must be replaced by price rises driven more by robust domestic demand, and accompanied by wage growth, in order for it to consider ending ultra-low interest rates.