Japan Producer Inflation Cools to 2.9% as Energy Costs Retreat

Japan’s upstream inflation eased for a third straight month in June, with the Bank of Japan’s domestic corporate goods price index rising 2.9% from a year earlier, down from May’s 3.2% gain and marking the first sub-3% reading in 10 months. The index, which tracks prices companies pay for goods and materials, stood at 126.2 on a 2020-base of 100, extending its run of annual increases to 52 months. On a seasonally adjusted basis, prices slipped 0.2% from May, matching the prior month’s decline and slightly underperforming a market consensus for a 0.1% drop. The data suggest that cost pressures at the factory and wholesale levels are losing momentum even as they remain elevated by historical standards. Rice and other food staples continued to run high—farm and marine products jumped 43.9% year on year and processed foods gained 4.5%—reflecting lingering pass-through of higher input and distribution costs. In contrast, expanded government gasoline subsidies and softer crude oil prices curbed gains in energy-related categories; petroleum and coal products fell 4.6%, while the rise in electricity, city gas and water charges slowed to 3.5%. Of the 515 items surveyed, 376 recorded price increases and 113 saw declines, underscoring a gradual but broad-based moderation in producer-level inflation.