Japan’s domestic corporate goods price index fell 0.3% month on month and rose 6.8% year on year in September. Although the overall pace is slowing, the pass-through of prices to downstream businesses is continuing, and upward pressure remains strong due to expanding AI-related demand and the impact of higher resource prices.
Japan’s domestic corporate goods price index fell 0.3% month on month and rose 6.8% year on year in September, with the year-on-year increase falling below 7% for the first time in 4 months. Although this was slower than the 7.6% increase in August, declines in agricultural, forestry and fishery products and petroleum products pushed down the overall index, while price pass-through to downstream businesses continued and inflationary pressure remained persistent.
Price increases have paused somewhat upstream and midstream, while downstream plastic products have maintained strong growth. The pass-through of previous cost increases has progressed, and prices of semiconductors, copper and other products have risen notably against a backdrop of expanding AI-related demand. Given persistently high resource prices, attention is also needed to the risk of renewed upward pressure from upstream.
Synthetic resins in the midstream sector declined, but year-on-year growth accelerated for downstream plastic products. Plastic containers and other packaging materials rose sharply, increasing the cost burden on downstream companies. The impact of AI-related demand is also evident in higher export prices.
Price pass-through to downstream businesses is expected to continue, while attention is also needed to new upward cost pressures from a renewed rise in resource prices. Import prices have risen at times on a contract-currency basis, and higher prices for oil, coal and natural gas are likely to push up market prices. Corporate goods prices are expected to remain high for the time being.
Overall, corporate goods prices slowed in September due to declines in agricultural, forestry and fishery products and petroleum products, but strong growth may continue for the time being against a backdrop of price pass-through downstream and AI-related price increases. The impact on consumer prices is also expected to emerge with a time lag.