Japan's producer prices extended a cooling streak to four months, possibly signaling its central bank's fight against inflation is going well.

Retarded by softer oil and steel prices, Japan's producer price index (PPI) rose 2.3% on year in January, down from a 2.4% on-year gain in December, reported the Bank of Japan on Thursday.

Japan's PPI measures selling prices received by domestic producers for goods at the factory gate, in business transactions with large buyers. It is distinct from the consumer price index (CPI), which measures prices in retail locations.

The nation's iron and steel PPI declined 5.5% on year in January, while the petroleum and coal index fell 12.9%.

In contrast, reflecting higher global copper prices, Japan's non-ferrous metals PPI rose 33% on year in January.

The agriculture PPI was up 22.4% on year in the month, largely due to higher rice bills.

Japan's PPI had accelerated during the pandemic era, striking a crest of a 10.6% on-year gain in December 2022.

More recently, the nation's PPI rose more than 4% on year in early 2025, but since then has been gradually easing.

The PPI is considered one leading indicator of a nation's consumer prices, as retailers try to recoup the costs of acquiring goods to stock shelves.

The Bank of Japan has a 2% annual inflation target on Japan's CPI-core, which strips out fresh food prices. That metric logged a 2.4% on-year gain in December, down from a 3% rise in November, reported officials.

Next week, officials will release the nation's CPI-core for January, sure to be watched carefully by the Bank of Japan for clues to the direction of the nation's prices.