Japan’s wholesale inflation continued its upward trajectory for the third consecutive month in November, as businesses passed on increased costs of raw materials and labor to customers. The rise revealed in data released on Wednesday (Dec 11) puts additional pressure on the Bank of Japan (BOJ) to consider further interest rate hikes when it meets for a policy review on Dec 19.
The Corporate Goods Price Index (CGPI), which tracks the prices businesses charge each other, rose by 3.7% in November compared to the same month last year. This surpassed market forecasts of a 3.4% increase and marked the fastest annual pace since July. This follows a 3.6% rise in October, signaling that inflationary pressures are persisting. Higher costs for food, non-ferrous metals, and plastic goods contributed to the increase, reflecting continued surges in commodity and labor costs. The index, at 124.3, has now reached a record high for the third month in a row.
Japan’s Wholesale Inflation Surges for Third Month – November
Takeshi Minami, chief economist at Norinchukin Research Institute, commented, “We are witnessing renewed inflationary pressures in domestic corporate goods prices. Given the ongoing inflationary pressure and the absence of a significant wage drop, there is a high likelihood that the BOJ could raise rates in December.”
Particularly notable were the steep price hikes in agricultural and fishery goods, which surged by 31% year-on-year in November, driven largely by the soaring cost of rice.
While the yen’s recent rebound has slowed the pace of import price declines, the currency’s fluctuations are still not enough to ease pressure on the cost of imported raw materials.
The BOJ’s policy decisions, including its first interest rate hike in July, hinge on the belief that Japan is on track to meet its 2% inflation target. Governor Kazuo Ueda has indicated that the BOJ may raise rates further if inflation remains stable and supported by solid wage and consumption growth.
Also, for analysis and updates, visit FXAN to stay informed on the latest news and insights. Also, follow us on Instagram.