Overview

• Japan's wholesale inflation slowed to 0.8% in October, the weakest in over two years, indicating cooling inflation.
• The slowdown was due to declines in prices for wood, chemical and steel products, reflecting the impact of falling global commodity costs.
• The data showed a continued sharp decline in lumber and utilities costs compared to the previous year.
• The yen’s recent slide beyond the ¥150 level against the dollar may renew upward moves in import costs, which the central bank will need to monitor closely.
• The Bank of Japan has stated that the recent cost-push inflation must be replaced by price rises driven more by robust domestic demand, and accompanied by wage growth, for it to consider ending ultra-low interest rates.