Japan's Input Inflation Stagnates, Easing Pressure on Bank of Japan

Government subsidies and the yen's gains help curb inflation, with 80% of items in the index seeing year-on-year price increases.

Japan's input prices were unchanged last month from a year earlier, the weakest showing in almost three years as the yen’s recent gains helped cap import costs.
The December producer price index, a measure of input prices for firms, was flat versus the same period in 2022, the first month without an advance since February 2021 and the 12th consecutive month in which price growth decelerated.
The data indicate that rises in consumer inflation will moderate in coming months, and take pressure off the Bank of Japan (BOJ) to phase out its massive monetary stimulus soon.
The slowdown in wholesale prices was due partly to government subsidies to curb petrol and utility bills, which combined shaved 0.9 per cent point off wholesale inflation.
About 80 per cent of items in the index saw prices rise from year-before levels, underscoring broadening inflationary pressure that may help the BOJ hit its 2 per cent inflation target.