2025-07-17
Slowing PPI Growth in Japan Signals Easing Cost Pressures
In June 2025, Japan's Producer Price Index ( PPI ) preliminary reading stood at 126.2, marking a 2.9% year-on-year increase. This marks the 52nd consecutive month of rising PPI; however, the pace of growth slowed as the increase dipped below 3% for the first time in ten months, down from 3.2% in May, indicating a cooling in producer price inflation. Meanwhile, in December 2024, Japan's PPI reached a near one-year high with a 3.7% year-over-year increase, marking three consecutive months of accelerating growth exceeding market expectations.
Beverage and food costs decreased by 4.5% (down from 4.7% in May), significantly dragging down the overall PPI
Electrical machinery prices rose 3.1%, a slowdown from 3.9% previously
Metal products declined by 4.0%, plastics by 3.2%, and general machinery by 4.3%
Chemical prices continued dropping by 3.0%, steel prices fell further by 5.2%
Oil and coal costs declined by 4.6%, reversing previous upward trends
However, prices of production machinery (2.5%), business-oriented machinery (2.6%), transportation equipment (2.1%), other manufacturing (3.4%), and information technology (2.4%) accelerated
Import prices continued their downtrend with double-digit declines sustained for five consecutive months, exerting downward pressure on PPI growth
Although Japan's PPI has set record highs for several consecutive years, growth started to decelerate around mid-2025, mainly due to falling energy and raw material prices, reflecting easing global supply chain pressures. Decreases in food and beverage prices also contribute to softening inflation. If commodity prices remain stable or continue to decline in the coming months, cost pressures on Japanese producers are likely to ease further, supporting moderate PPI growth. The market expects the Bank of Jap
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