Japan Economic Flash: Naphtha-flation (2): Are There Signs of the Overshoot Feared by the BOJ?

Research evidence excerpt

Japan Economic Flash: Naphtha-flation (2): Are There Signs of the Overshoot Feared by the BOJ?

Economics Research

18 June 2026 | 9:13PM JST

Japan Economic Flash: Naphtha-flation (2): Are There Signs of the

Overshoot Feared by the BOJ?

n At its June 16 monetary policy meeting, the BOJ noted that price pass-through in Tomohiro Ota

+81(3)4587-9984 |

B2B transactions, triggered by the rise in crude oil prices, is proceeding at a tomohiro.ota@gs.com

Goldman Sachs Japan Co., Ltd.

somewhat rapid pace, and that this could pose an upside risk to the CPI inflation

rate going forward. The BOJ also mentioned the possibility that the underlying

inflation rate could overshoot its 2% target as a result, suggesting that this issue

is an important focal point for the conduct of monetary policy going forward.

n In this report, we examine the trend and the spread of the pass-through of

higher crude oil prices into B2B transaction prices mentioned by the BOJ, and

review the impact on the CPI inflation rate which we estimated in April.

n One month after the rise in crude oil prices, there has been a clear increase in the

prices of naphtha, as well as naphtha-derived ethylene, plastics and other

products, demonstrating the rapid pace of price pass-through pointed out by the

BOJ. On the other hand, however, prices for fuels such as gasoline—which would

normally rise in tandem with crude oil prices and push up logistics costs—have

seen only marginal increases due to government price-mitigation measures. As a

result, the impact of high crude oil prices has been confined to its transmission

through rising naphtha prices, with little evidence of price increases spreading

beyond chemical products.

n The price increases for individual items currently remain within the bounds of