East Asia Econ

Japan – PPI rising again

In September, even before the renewed JPY depreciation of the last week, PPI inflation rose. By raising import prices, USDJPY back above 150 will mean input price inflation remains stronger for longer. The (relative) hawks at the BOJ will be becoming more convinced that inflation is sustainable.

Paul Cavey

Oct 10, 2025 • 3 min read

Public Post

East Asia Today

A couple of notes on China today, one covering today's inflation release, and the other a slide pack making the case for higher rates. Elsewhere, Taiwan released FDI data for September. Outflows have eased in recent months, but the clear shift away from investing in China is persisting.

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China – the case for higher rates

For the first time since 2021, my models show a fall in the probability of easing. The backdrop is effective monetary policy: inflation is low, but there aren't signs of rising real rates. For now, my base case is rates stop falling. For rates to rise, inflation needs to show up outside of equities.

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China – PPI stabilises, but not firmly

The stabilisation of PPI is fragile, with continued sharp falls in some of the sectors targeted by anti-involution, as well as continued weakness in building materials prices. In CPI, falling food prices will eventually reverse, but soft services prices shows underlying CPI inflation remains weak.