A woman looks at products at a store in Tokyo on March 24, 2023.Reuters/Androniki Christodoulou/File photo Obtaining license rights
TOKYO, Nov 13 (Reuters) – Japan’s wholesale inflation rate fell below 1% in October for the first time in more than two-and-a-half years, data showed on Monday. A wide range of items were beginning to fade.
Analysts said the commodity-led inflation slowdown is in line with the Bank of Japan’s forecast, with the focus on whether wages and household spending will rise enough to trigger demand-driven consumer price increases. .
Takeshi Minami, chief economist at the Norinchukin Research Institute, said, “The past declines in raw material and energy costs are being reflected in domestic inter-company prices, and wholesale inflation appears to be slowing down.”
He said the effects of government subsidies that curb gasoline and utility bills are likely to lead to a slowdown in consumer inflation by the end of the fiscal year ending March 2024.
“However, the pace of deceleration in consumer inflation is likely to be moderate as labor shortages and rising wages support service prices.”
The Corporate Goods Price Index (CGPI), which measures the prices companies charge each other for goods and services, rose 0.8% year-on-year in October, roughly matching market expectations for a 0.9% rise, but 2.2%. % has slowed down significantly. % increase in September.
Wholesale inflation slowed for the 10th consecutive month, with year-on-year growth falling below 1% for the first time since February 2021, data showed.
The data showed the economic slowdown was driven by lower prices for wood, chemicals and steel products, highlighting the impact of falling global commodity costs.
A spike in wholesale inflation is prompting many Japanese companies to pass on rising costs to household budgets, a trend that prompted the Bank of Japan to revise its inflation forecast upward in its quarterly forecast in October.
The Bank of Japan has said that in order to consider ending ultra-low interest rates, such cost-push inflation needs to be eliminated and replaced with rising prices driven by strong domestic demand.
Bank of Japan Governor Kazuo Ueda says Japan is making progress toward sustainably achieving the Bank of Japan’s 2% target, suggesting that conditions are gradually forming for a break from ultra-easy monetary policy. did.
Reporting: Laika Kihara Editing: Shri Navaratnam, Sam Holmes
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