Japan’s Producer Price Inflation Picks Up To 7.1% In October
The Bank of Japan’s October release shows producer prices rising again month on month, with energy lifting import costs.
Japan’s producer prices rose 7.1% from a year earlier in October, up from 6.8% in September, according to preliminary figures released by the Bank of Japan (BOJ) at 23:50 UTC on 11th November. The index measures prices of goods produced and traded domestically between businesses. It rose 0.7% from September after two consecutive monthly declines. Annual producer inflation was still below July’s 7.7% reading.
Petroleum and coal products contributed 0.20 percentage points to October’s monthly increase. Chemicals contributed another 0.15 points, as did electricity, gas and water. Prices in agriculture, forestry and fisheries moved the other way, taking 0.28 points off the monthly increase. The bank lists rice and pork among the products in that group that contributed to the decline.
Prices in the currencies used in import contracts climbed 2.3% over the month, with petroleum, coal and natural gas accounting for 1.62 percentage points of that change. The same index expressed in yen rose 3.3%, a 1.0 percentage point larger increase. Our coverage of China’s October inflation figures looks at a similar role for energy in factory prices.
In a separate speech in Nagasaki, BOJ policy board member Toichiro Asada said the question was how quickly and how much of the rise in costs earlier in the supply chain would reach consumers. He said the bank should watch how rate increases affect household loans and financing conditions for firms. He said those effects would likely take at least a year to become clear.
Asada said he had voted against increases in June and September and backed keeping rates unchanged in July and October. The June and September decisions took the rate to 1.25%. The October meeting's official summary recorded calls to reach a neutral rate faster, alongside warnings against hasty increases. Our report on that policy debate explains the differing views on a rate that neither stimulates nor restrains the economy.
The Statistics Bureau’s September household survey, published on 10th November, recorded a 6.8% annual fall in spending by households with two or more people after accounting for inflation. For the survey’s workers’ households, real income rose 0.9%. The bureau’s next national consumer price release is due on 20th November and covers October.
