TOKYO Japan’s annual wholesale inflation slowed in August, as the yen’s rebound weighed on import costs, data showed on Thursday, taking some pressure off the central bank to address upward price risks with near-term interest rate hikes.
The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, rose 2.5% in August from a year earlier, Bank of Japan (BOJ) data showed, slowing from a 3.0% gain in July. It fell short of market forecasts for a 2.8% increase.
The Japanese currency’s sharp rise during the month weighed on the yen-based import price index, which rose by just 2.6% in the year to August, after a 10.8% spike in July, the data showed.
On a month-on-month basis, wholesale prices fell 0.2% in August. The yen-based import price index also dropped 6.1% in August, from the previous month.
The slowdown in wholesale inflation, which will affect the broader consumer price data in coming months, may influence the timing of the BOJ’s next interest rate hike.
The BOJ ended negative interest rates in March and hiked short-term borrowing costs to 0.25% in July, on the view that Japan was making steady progress towards durably achieving its 2% inflation target.
BOJ governor Kazuo Ueda cited the risk of an inflation overshoot from rising import costs as among factors that led to the bank’s decision to hike rates in July.
He has also signalled the BOJ’s readiness to raise rates again, if consumer inflation remains on track to hit 2% in the coming years, backed by solid wage gains, as the board projects.
- Reuters
Created by Tan KW | Sep 12, 2024
Created by Tan KW | Sep 12, 2024
Created by Tan KW | Sep 12, 2024