More sticky high inflation data, this time from Japan. Bank of Japan March meeting is live

The PPI data is here:

• Japan PPI for January is +4.2%y/y (expected +4.0% prior +3.9%)
• January 4.2%, December 3.9%, November 3.8% is the latest quarter’s trend

The Bank of Japan (BOJ) is facing increasing inflationary pressures, with the latest corporate goods price index (CGPI) data showing a 4.2% rise in January—exceeding market expectations of 4.0% and accelerating from 3.9% in December. The data underscores persistent wholesale price inflation, which could feed into consumer prices in the coming months. BOJ Governor Kazuo Ueda acknowledged these pressures when he spoke in parliament yesterday, highlighting the risk that elevated food prices may continue to influence consumer inflation expectations.

Ueda expressed concern that sustained price increases in fresh food and everyday essentials could have a lasting impact on public sentiment. While he maintains that cost-push inflation is likely to dissipate toward mid-year, the BOJ remains cautious in its monetary policy stance, particularly after last month’s historic decision to raise short-term interest rates to 0.5%—a level not seen in Japan for 17 years. With consumer prices rising 3.6% in December, outpacing the 3.0% core inflation rate, policymakers are monitoring whether inflation remains anchored around their 2% target in a sustainable manner.

Ueda reaffirmed that the pace of future interest rate hikes will depend on evolving economic conditions, including wage growth and broader inflation trends. The BOJ is also set to conduct a mid-term review in June to assess its government bond tapering plan, which aims to halve monthly Japanese government bond purchases to 3 trillion yen by early 2026. While the central bank remains committed to a gradual tightening process, Ueda emphasized that any adjustments will be made flexibly and predictably to maintain financial market stability.

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I noted in the headline that the March BOJ meeting is live. I think May is much more likely than March, though.

This article was written by Eamonn Sheridan at www.forexlive.com.