Japan's wholesale inflation rose less than forecast, and food drove the monthly drop

Japan's wholesale prices, the Bank of Japan's producer price index, rose 6.8% in the year to September, the bank said Tuesday, October 13, 2026, short of the 7.6% median forecast compiled by Reuters, which matched August's rate. The index fell 0.3% on the month, against a Reuters median forecast of a 0.5% rise. Brown rice, polished rice and pork subtracted 0.42 percentage points from that monthly change, more than the drop itself, while chemicals and power quickened and import prices stayed high.

Prices for agriculture, forestry and fishery products fell 8.8% from August and 13.3% from a year earlier, after a 1.5% annual increase in August. Taken together, other prices offset part of that drag.

Bloomberg said the easing in the annual rate, from 7.6% in August to 6.8%, was the sharpest since May 2025.

Petroleum and coal products fell 2.2% on the month, and their annual increase slowed to 11.5% from 14.7%. Bloomberg said the report linked that slower gain to government subsidies.

Chemical prices rose 0.3% on the month, and the annual increase quickened to 13.3% from 13.0%. That 13.3% matches the annual drop in agriculture, forestry and fishery products. Electric power, gas and water rose 1.3% on the month, and the annual increase there rose to 10.5% from 8.2%.

Yen-based import prices rose 24.5% from a year earlier, after a revised 25.1% in August. On a contract-currency basis, which leaves the exchange rate out, they rose 17.9%. Reuters said the yen's weakness continued to push up the cost of raw material imports.

What it leaves for the October meeting

On September 18 the Policy Board raised its policy rate, the uncollateralized overnight call rate, to around 1.25% from around 1%, by a 7-2 vote. Toichiro Asada and Ayano Sato voted against the increase, the bank said, and the new rate took effect September 24. Reuters described the rise as a move to a 31-year high.

The bank said it "will continue to raise the policy interest rate and adjust the degree of monetary accommodation, in response to developments in economic activity and prices as well as financial conditions."

Bloomberg wrote that Tuesday's figures leave little need for a back-to-back increase on October 30, and that high input costs still leave the bank on a path of further increases. Reuters said the 6.8% reading keeps alive market expectations of a near-term hike.

"Wholesale inflation will likely re-accelerate given strong uncertainty over the Middle East conflict, which is keeping crude oil prices elevated," Masato Koike, senior economist at Sompo Institute Plus, told Reuters.

"But there's no sign of inflationary pressure accelerating sharply for the time being," he said.

That, he told Reuters, raises the chance the bank holds in October and waits until December. The bank has scheduled its December meeting for December 17 and 18.

Governor Kazuo Ueda has said the pace and timing of further increases turn on how far upward pressure on wholesale prices spreads into consumer inflation and spending, Reuters reported.

The bank will publish new quarterly forecasts for growth and inflation at its October 29 and 30 meeting. Many analysts expect the bank to raise rates again by the end of this year, Reuters said.