Japan’s Oct wholesale inflation slows sharply, signals waning cost pressures

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

TOKYO  – Japanese wholesale inflation slowed sharply October year-on-year, 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 percent in October from a year earlier, roughly matching a median market forecast for a 0.9-percent gain but cooling significantly from a 2.2-percent rise in September.

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.