The pace of gains in Japan’s producer prices decelerated more than expected in October to the weakest in over two years, supporting the Bank of Japan’s view that inflation is cooling.

A measure of input prices for Japanese firms rose 0.8% from a year earlier, the slowest pace of growth since gains resumed in March 2021, the Bank of Japan reported Monday. The data compared with economists’ expectations of a 0.9% increase year-on-year. From the prior month, prices fell 0.4%, compared to the consensus view of a 0% change.

The data came out weaker than the 2.8% gain in core consumer prices measured in September, meaning inflation for materials was slower than the most recent reading of the central bank’s benchmark gauge for the second consecutive month. The October data for consumer inflation is due on Nov. 24.

The slowdown of producer-side price growth this year is in line with the BOJ’s view that inflation is moderating and needs close monitoring to see if the trend will last. Input prices gains below the BOJ’s 2% price target suggest that inflation cannot persist above the target on a cost-push basis alone.

The report showed a continued sharp decline in lumber and utilities costs compared to the previous year. Still, the yen’s recent slide beyond the 150 level against the dollar may renew upward moves in import costs, another factor the the central bank will need to keep a close eye on.