Japan's Inflation Shows Easing, Gas Prices Decrease

The latest data released on Monday, Japan's wholesale inflation fell for a fifth straight month in May as a result of falling gasoline and commodity prices, a sign that the cost-push pressure that has raised consumer inflation may be abating.

The data supports the central bank's prediction that consumer inflation will moderate in the months ahead as global commodity prices decline from their record levels from the previous year.

This week, the Bank of Japan (BOJ) is anticipated to retain its ultra-loose monetary policy and stick to its prediction for a mild economic recovery as strong business and household spending offset the impact of sluggish global demand, according to sources.

According to BOJ data, the corporate goods price index (CGPI), which tracks the prices businesses charge one another for goods and services, increased 5.1% in May compared to the same month last year, which was less than the median market expectation of 5.5%.

The increase followed a corrected 5.9% gain in April and was significantly below the peak of 10.6% recorded in December of last year as prices of chemicals, fuel, nonferrous metals, and electricity declined, according to the report.

The data showed that the cost constraints on industries close to homes, including restaurants and stores, were still present in May, with the prices of food and beverage products rising 7.9% from a year earlier and those of electric equipment up 5.5%.

As businesses kept raising prices, Japan's core consumer inflation reached 3.4% in April. This raises questions about the BOJ's prediction that inflation will gradually fall back below 2% in the second half of the current fiscal year, which ends in March 2024.