DECEMBERASIA BUSINESS OUTLOOK9NEWSROOMSURGING JAPANESE INFLATION DRIVEN BY RISING FOOD COSTSThe market for automotive aftermarket wear and tear in Asia Pacific is projected to grow at a compound annual rate of 3.7 percent between 2023 and 2028, as per report from Globaldata. It is expected that this industry, encompassing car parts for repairs, mechanical parts, components subject to wear and tear, and tires, will grow from 1.4 billion units in 2023 to 1.68 billion units by 2028.Madhuchhanda Palit, an automotive analyst at GlobalData, pointed out that market expansion will be impacted by various factors such as the quantity of vehicles on the road, frequency of accidents, driving habits, and population characteristics.Countries like India and Thailand, which heavily depend on personal vehicles, are forecasted to experience a substantial increase in demand for aftermarket products and services. Furthermore, variables such as the state of roads, traffic regulations, and the implementation of advanced driver assistance systems could affect the need for crash repair services and other aftermarket parts.The Automotive Industry is forecasted to increase to USD 6950.55 billion by 2032 from USD 4075.65 Billion in 2024, showing a CAGR of 6.9 percent from 2024 to 2032. The Automotive Industry market was worth $3812.5 billion in 2023. The automotive market is experiencing growth due to a rise in demand for luxury passenger vehicles, as well as increased urbanization and infrastructure spending in the economy. Japan's drivers behind the spike in wholesale inflation were higher costs for rice, nonferrous metals, food, and oil. This indicates that companies continue to face pressure from rising raw material costs. Despite these rising costs, the yen-based import price index fell by 2.2 percent compared to the previous year, a smaller decline than the 2.5 percent drop in September. On a month-on-month basis, the index rose by 3.0 percent, as the yen weakened by 4.3 percent against the dollar, keeping import costs high.Takeshi Minami, Chief Economist at Norinchukin Research Institute, noted that inflationary pressure on wholesale goods prices remains persistent. While consumption lacks momentum, wage increases are continuing, which raises the likelihood of a Bank of Japan (BOJ) interest rate hike in December.Japan's wholesale inflation surged in October, reaching its highest annual pace in over a year. The Corporate Goods Price Index (CGPI), which tracks the prices companies charge each other for goods and services, climbed by 3.4 percent year-on-year, surpassing market forecasts of a 3.0 percent increase. This follows a 3.1 percent rise in September, marking the fastest growth since August 2023.The Bank of Japan ended its negative interest rate policy in March and raised short-term rates to 0.25 percent in July, citing progress toward its 2 percent inflation target. Governor Kazuo Ueda emphasized the bank's readiness to raise rates again if inflation shifts from being driven by rising raw material costs to being fueled by strong domestic demand and wage growth.A Reuters poll from early October showed that most economists expect the BOJ to raise interest rates by the end of March 2025, with some predicting a rate hike as early as December. APAC'S AUTOMOTIVE AFTERMARKET GEARS UP FOR 3.7 PERCENT GROWTH SURGE BY 2028
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