THE global investor fear of a period of sustained inflation has even reached the shores of deflation-prone Japan.

The country’s 10-year breakeven rate — a bond-market derived gauge of inflation expectations over the next decade — climbed to its highest since 2018 this week. A slump in the yen and surge in commodity prices have fueled the gain and analysts don’t expect it to reverse anytime soon.

An energy price surge that has sent a shockwave through markets is making investors reassess the narrative that post-pandemic price rises are temporary. Longer-dated price expectations are pushing higher in the United States and the move in Japan shows even countries that have historically struggled to generate inflation aren’t immune.

Japan’s consumer prices stopped falling in August for the first time in 13 months, ending the country’s longest deflationary stretch since 2011.

“Japan’s breakeven is unlikely to fall immediately as it typically tracks the U.S. breakeven inflation rate which is also on the rise,” said Katsutoshi Inadome, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

Japan’s wholesale inflation hit a 13-year high in September as rising global commodity prices and a weak yen pushed up import costs, putting pressure on corporate margins and raising the risk of unwanted consumer price hikes.

Rising input costs are adding strain for manufacturers already hit by supply constraints and clouding the outlook for the world’s third largest economy, which relies on exports to cushion the blow from soft consumption, analysts say.

The corporate goods price index, which measures the price companies charge each other for their goods and services, surged 6.3 percent in September from a year earlier, Bank of Japan data showed yesterday, exceeding market forecasts for a 5.9 percent gain.(SD-Agencies)