Japan's CGPI is up 2.7 percent on year in October after a revised 2.8 percent increase in September (previously reported up 2.7 percent). The latest rise is slightly above the 2.6 percent median forecast.

Two key factors lifting prices are elevated rice prices and nonferrous metals. On an annual basis, farm produce prices are up 31.4 percent in October versus a revised 31.9 percent in September.

CGPI is up 0.4 percent in October on the month after rising a revised 0.5 percent in September (previously reported up 0.3 percent in September). The October increase matched the median expectation.

Japan’s corporate goods price index (CGPI), or producer inflation, is expected to rise 2.6 percent in October from a year earlier, following a 2.7 percent gain in September. Slower but still elevated rice prices, along with higher commodity prices such as nonferrous metals, are keeping producer inflation firm.

Average retail rice prices edged higher in October from the previous month, though the year-on-year increase has moderated due to a higher comparison base. Even so, rice prices remain high, and overall food costs continue to exert upward pressure on prices.

Prices of nonferrous metals also climbed across a broad range of items. Copper rose as global prices surged on supply concerns following accidents at major mines, pushing domestic prices higher. Aluminum and zinc prices posted similar gains.

By contrast, prices of petroleum and chemical products fell from the previous month amid weaker crude oil markets.

The yen has also remained weaker against the dollar since the summer compared with a year earlier, suggesting that import prices may have bottomed out in October.

On a month-on-month basis, the CGPI is projected to rise 0.4 percent in October, marking a second straight increase after a 0.3 percent gain in September and a 0.2 percent drop in August. The September gain was driven by higher prices for agricultural products such as rice and eggs, nonferrous metals including copper, gold bullion, and plastic-coated copper wire, as well as oil and coal products such as gasoline, diesel oil, and kerosene.

The Producer Price Index (PPI) is a measure of the average price level for a fixed basket of capital and consumer goods paid by producers. Analysts look to the PPI for early signs of inflation in the production process.

The producer price index focuses on the prices of goods transacted between companies. It was previously known as the corporate goods price index. The index reflects the price level for the supply and demand of individual industrial goods. This index is calculated by the BoJ Research and Statistics Department. Three indexes are contained in this release - the domestic producer index, the export price index and the import price index. It is the domestic index that market players follow. The PPI comprehensively tracks input price pressures; however, the PPI has a track record of increasing and not necessarily feeding through to the CPI because of weak demand. But if an increase in the PPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates.