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JAPAN: Import Prices May Soon Return To Positive Y/Y Territory

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Earlier data showed Japan import prices down -2.2% y/y in Oct, little changed from September's -2.5% pace. Still, in m/m terms import prices were up 3.0% m/m, the first gain since July of this year. 

  • Y/Y momentum in import prices may soon return to positive territory. The chart below overlays import prices against y/y changes in USD/JPY.
  • If USD/JPY holds at current levels into year end (near 155.00) it will have the y/y change at nearly +10% by end December, which is the extended line shown in the chart below.
  • Today's data showed all import prices up in m/m terms by sub-category.
  • The main BoJ focus point is on domestic service price pressures. As our policy team noted earlier today "BOJ officials are encouraged by the October price revisions as firms are transferring higher labour costs to retail prices. They will now focus on the October nationwide CPI due out on Nov. 22 to examine services prices."
  • Still, higher import costs via a weaker yen, could still impact BoJ thinking over coming months.  

Fig 1: Japan Import Prices & USD/JPY Y/Y Changes 

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Earlier data showed Japan import prices down -2.2% y/y in Oct, little changed from September's -2.5% pace. Still, in m/m terms import prices were up 3.0% m/m, the first gain since July of this year. 

  • Y/Y momentum in import prices may soon return to positive territory. The chart below overlays import prices against y/y changes in USD/JPY.
  • If USD/JPY holds at current levels into year end (near 155.00) it will have the y/y change at nearly +10% by end December, which is the extended line shown in the chart below.
  • Today's data showed all import prices up in m/m terms by sub-category.
  • The main BoJ focus point is on domestic service price pressures. As our policy team noted earlier today "BOJ officials are encouraged by the October price revisions as firms are transferring higher labour costs to retail prices. They will now focus on the October nationwide CPI due out on Nov. 22 to examine services prices."
  • Still, higher import costs via a weaker yen, could still impact BoJ thinking over coming months.  

Fig 1: Japan Import Prices & USD/JPY Y/Y Changes 

Keep reading...Show less