JAPAN DATA: Yen Rise Could Curb Rising Import Prices, But Y/Y May Stay Positive

Japan import prices rose, in m/m terms, for the seventh straight month in Jan. The chart below plots USD/JPY m/m changes against import prices m/m. USD/JPY fell m/m in Jan and if current levels hold to the end of Feb, we will also see a m/m decline for this month. This may help curb upside momentum in monthly import price rises, or at least bring us back closer to flat. Such trends are likely to remain a key BoJ focus point through 2026, as it decides around the timing of its next hike. * In y/y terms import prices are +0.5%, well up from the July 2025 low of -10.6%. Given the negative y/y base effects through the first half of 2025 it will likely require sharp m/m falls in coming months to not see y/y import price momentum rise. For a given level of global commodity prices, this is likely to require further strong gains in yen versus the USD. Fig 1: USD/JPY M/M & Japan Import Prices M/M Source: Bloomberg Finance L.P./MNI

JAPAN DATA: Jan PPI In Line, Import Prices Edge Higher In Y/Y Terms

The Japan Jan PPI was in line with market forecasts. We rose 0.2%m/m after a 0.1% gain in Dec. The y/y outcome rose 2.3% (also in line with consensus), slightly down on the Dec 2.4% outcome. The PPI y/y sits well off early 2025 highs above 4%, but is only slightly down on mid 2025 levels near 2.5%y/y. The chart below plots the PPI y/y and CPI (headline y/y) trends. The two series have been reasonably aligned of late, with headline CPI trending towards 2%y/y * The detail showed manufacturing PPI up 0.4%m/m (after a 0.1% gain in Dec). Big shifts remain evident in the commodity space, non ferrous metals up 10.6% in the month, while petroleum and coal fell 2.5%. * Import prices rose 0.5% y/y, after a -0.2% gain in Dec. We were up 1.7%m/m in Jan, after a 1.3% gain in Dec. Import prices have risen in each month since July last year. Via our policy team - Some BoJ board members expressed concern about yen-driven inflation risks and signalled the possibility of an earlier rate hike. * If the recent USD/JPY turn lower is sustained, it may help curb higher import prices. Fig 1: Japan PPI Y/Y & Headline CPI Y/Y Source: Bloomberg Finance L.P./MNI

MNI: JAPAN JAN CORP GOODS PRICE INDEX +2.3% Y/Y; DEC +2.4%

* MNI: JAPAN JAN CORP GOODS PRICE INDEX +2.3% Y/Y; DEC +2.4% * JAPAN JAN CORP GOODS PRICE INDEX +0.2% M/M; DEC +0.1%

MNI: US JAN TREASURY BUDGET -$94.6B

* MNI: US JAN TREASURY BUDGET -$94.6B