Japan's wholesale inflation remains elevated, keeping BOJ rate-hike view alive
TLT•Japan's wholesale prices rose 6.8% year over year in September, below the 7.6% forecast and August's 7.6% increase. Yen-based import prices surged 24.5%, while the data will be among the factors the BOJ examines at its October policy meeting.
1. Wholesale inflation slows
Japan's corporate goods price index rose 6.8% in the year to September, slowing from a 7.6% gain in August and below the 7.6% median market forecast. The yen-based import price index surged 24.5% year over year, as the weak currency continued to raise raw-material import costs.
2. Price pressures vary
Farm product prices fell 13.3% year over year, largely due to plunging rice prices, while prices rose for processed food, electric machinery and telecommunications equipment. Chemical goods rose 13.3%, plastic products increased 12.8% and non-ferrous metals goods were up 40.2%. An economist said wholesale inflation would likely re-accelerate amid uncertainty over the Middle East conflict, but saw no sign of a sharp acceleration in inflationary pressure for now.
3. BOJ weighs next steps
The data will be among the factors the Bank of Japan scrutinises as it prepares fresh growth and inflation forecasts at its October 29-30 meeting. BOJ Governor Kazuo Ueda has said future rate hikes will depend on how wholesale price pressures spread to consumer inflation and affect consumption. Many analysts expect another rate increase by year-end.
