Japan: Goods inflation risks stay upside – Societe Generale

Societe Generale economists Reo Sakida and Jin Kenzaki note that food inflation continued to ease in October's Tokyo CPI data, while oil-related goods inflation edged higher. They highlight that rising upstream food prices and energy costs have yet to fully feed through to consumer prices, leaving risks to goods inflation tilted to the upside in the coming months.

Goods prices and energy-driven pressures

"The contribution from goods prices was broadly unchanged at +1.61pp (vs +1.62pp). Food prices continued to slow, with their contribution falling to +0.74pp (vs +0.86pp). This partly reflects a high base in October 2025, while food prices have yet to reflect higher upstream costs."

"In recent months, leading PPI indicators and food CPI have diverged, with consumer prices yet to follow the rise in producer prices. We expect food CPI to catch up in the coming months."

"Inflation in oil-related goods accelerated slightly to +0.20pp (vs +0.18pp), remaining on an upward trend. The contribution from these items has risen sharply over the past four months, from +0.06pp in June. Consumer prices have yet to fully reflect the latest increase in energy costs due to the ongoing unrest in the Middle East."

"With the latest increase in energy costs not yet fully reflected in consumer prices, risks to goods inflation remain tilted to the upside."