Japan’s wholesale inflation surged to 4.2% in January, marking its fifth consecutive monthly increase and exceeding market forecasts of 4.0%. The rise in the corporate goods price index (CGPI), which tracks business-to-business price changes, follows a revised 3.9% gain in December, reflecting persistent inflationary pressures.
Data from the Bank of Japan (BOJ) revealed that prices rose across multiple sectors, including food, textiles, plastics, and non-ferrous metals. The yen-based import price index climbed 1.5% in January, reversing a 0.7% drop in December, as the yen’s continued weakness inflated costs for businesses.
The report comes after BOJ Governor Kazuo Ueda cautioned that rising food costs could shape inflation expectations, reinforcing speculation of a near-term interest rate hike. The two-year Japanese government bond (JGB) yield, a key indicator of monetary policy expectations, jumped to 0.805%, its highest level since October 2008.
Global currency movements also played a role, with strong U.S. inflation data reducing market expectations for near-term Federal Reserve rate cuts. This drove the dollar up 1.29% to 154.44 yen overnight, further pressuring import costs.
The BOJ, which raised short-term interest rates to 0.5% in January after ending a decade-long stimulus program, has signaled further hikes if wage increases sustain consumption and allow companies to keep raising prices for both goods and services.
While the BOJ primarily targets consumer inflation, wholesale price increases typically lead to higher consumer costs. Japan’s core consumer inflation hit 3.0% in December, the fastest pace in 16 months, remaining above the BOJ’s 2% target for nearly three years.


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