Japan’s wholesale inflation remained elevated in August, strengthening the case for the Bank of Japan to consider another interest rate rise as food prices continued to climb.
The corporate goods price index, which tracks the prices companies charge one another for goods and services, rose 2.7% from a year earlier, according to preliminary data released by the Bank of Japan on Thursday September 11. The increase followed a revised 2.5% rise in July and matched economists’ expectations.
Food and beverage prices were 5% higher than a year earlier, accelerating from July’s revised 4.7% increase. Prices for agricultural, forestry and fishery products also remained sharply higher, although the annual increase eased slightly from the previous month.
The figures are closely watched because wholesale prices can provide an early indication of pressures that may later feed through to consumer inflation. They are expected to be among the indicators considered by the central bank at its policy meeting on September 18 and 19.
The Bank of Japan ended a decade of large-scale monetary stimulus last year and raised its policy rate to 0.5% in January. Governor Kazuo Ueda has nevertheless signalled that officials will proceed carefully while assessing the effect of US tariffs on the Japanese economy.
There were signs that some cost pressures were easing. Electricity, gas and water charges fell 2.9% year on year in August, partly because of government subsidies, while the yen-based import price index declined 3.9%, compared with a revised 10.3% fall in July.
The producer price index fell 0.2% from July, the Bank of Japan said. Even so, the continued rise in food-related wholesale prices is likely to keep attention focused on whether inflation is becoming sufficiently persistent to justify further tightening.
