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Producer prices in Japan increased by 2.5% y/y in August 2024, slower than a 3.0% growth in the prior month and below market consensus of 2.8%, marking the lowest producer inflation since May, as cost eased.
Monthly, producer prices fell by 0.2%, the first decline in ten months, missing estimates of a flat reading.
Additionally, the business survey index of large manufacturing firms in Japan jumped to 4.5% in the third quarter of 2024 from -1% in the second quarter, defying market expectations for a deterioration to -2.5%.
The index also turned positive for the first time in three quarters, even after the Bank of Japan raised interest rates in July and signaled plans to hike rates steadily.
Separately, BOJ board member Naoki Tamura said on Thursday that the central bank must push up short-term rates to at least around 1% through fiscal 2026 to stably achieve the 2% inflation target.
BOJ board member Junko Nakagawa also said this week that the central bank will continue raising interest rates if the economy and inflation move in line with its forecasts.
The Nikkei 225 Index jumped 3.5% to above 36,800 while the broader Topix Index gained 2.6% to 2,600 on Thursday, reversing losses from the previous session, and the Japanese yen eased to around 142.5 per dollar.
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