TOKYO, Sept 12 (Askume) – Japan’s annual wholesale inflation slowed in August, data showed on Thursday, as a stronger yen weighed on import costs, prompting the central bank to raise interest rates in the near future to counter the pressure.
Data from the Bank of Japan (BOJ) showed that the Corporate Goods Price Index (CGPI), which measures the prices that companies charge each other for goods and services, fell 2.5% in August from a year earlier. This was below market forecasts for a 2.8% rise.
Data showed the yen’s sharp appreciation this month has weighed on the yen-based import price index, which rose only 2.6% through August after rising 10.8% in July.
From a month-on-month perspective, wholesale prices fell 0.2% in August. The yen-based import price index also fell 6.1% in August from the previous quarter.
Slower wholesale inflation will impact broader consumer price data in the coming months, potentially affecting the timing of the Bank of Japan’s next interest rate hike.
As Japan makes progress toward its 2% inflation target, the Bank of Japan ended negative interest rates in March and raised short-term borrowing costs to 0.25% in July.
Bank of Japan Governor Kazuo Ueda said the risk of rising inflation due to rising import costs was one of the factors in the bank’s decision to raise interest rates in July.
He also said the BOJ is prepared to raise interest rates again if consumer inflation stays on track at 2% and wages rise steadily over the next few years, as the committee forecasts.
