- Japan's wholesale inflation slows sharply in sign of waning cost pressures

Japanese wholesale inflation slowed below 1% for the first time in over 2-1/2 years, indicating a decline in cost push pressures that had been driving up prices for various goods. The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, increased by 0.8% in October compared to the previous year. This figure aligns with the market forecast for a 0.9% gain but represents a significant cooling from the 2.2% rise in September. The data reveals that this is the 10th consecutive month of slowing wholesale inflation, with the year-on-year growth rate falling below 1% for the first time since February 2021. The decline in prices for wood, chemical, and steel products contributed to this slowdown, highlighting the impact of decreasing global commodity costs. The surge in wholesale inflation has prompted many Japanese companies to pass on higher costs to households, leading the Bank of Japan to revise its inflation forecasts in October. However, the Bank of Japan emphasizes that cost-push inflation must be replaced by price increases driven by robust domestic demand and accompanied by wage growth in order for it to consider ending ultra-low interest rates.