Nov. 12 (Bloomberg) -- Japan's wholesale inflation accelerated in October, adding to signs consumer prices may soon resume rising in the world's second-largest economy.

The producer-price index climbed 2.4 percent from a year earlier, the 44th monthly increase, after a 1.7 percent gain in September, the Bank of Japan said in Tokyo today.

Surging raw-materials costs prompted Kirin Holdings Co. and Daio Paper Corp. to raise prices of beer and toilet paper. Oil is near $100 a barrel and grains and non-ferrous metals are becoming more expensive because of global demand. Even so, consumer prices have failed to rise this year as competition among retailers makes it hard to pass costs on to households.

``Rising oil costs are giving wholesale prices a big boost, putting upward pressure on consumer prices,'' said Junko Nishioka, senior economist at ABN Amro Securities in Tokyo. ``We'll see more large companies pass costs to consumers.''

A Finance Ministry report released at the same time showed the current account surplus widened 40 percent in September to 2.88 trillion yen ($26 billion), the second highest on record, as exports and earnings from overseas investments rose.

The yen traded at 110.06 per dollar at 12:39 p.m. in Tokyo from 110.63 before the reports, as investors cut holdings of higher-yielding assets bought with money borrowed in Japan.

The median forecast of 31 economists surveyed by Bloomberg News was for wholesale prices to rise 2.3 percent.

Japan's consumer prices excluding fresh food fell 0.1 percent in September, an eighth monthly drop.

Consumer Prices

``Core consumer prices will probably resume rising in October or November at the latest, partly buoyed by oil prices,'' said Mamoru Yamazaki, chief Japan economist at RBS Securities in Tokyo. ``Then price gains will gradually pick up momentum as more companies start passing on costs.''

Kirin, Japan's biggest brewer, last month said it will raise beer prices for the first time in 17 years to cover the higher cost of brewing malt and aluminum. The price of malt has more than doubled and aluminum for cans has risen about 30 percent in the past year, Kirin said.

Daio Paper this month raised wholesale prices of tissue and toilet paper by about 15 percent, the second increase this year, citing higher costs of oil and wood chips.

Crude oil rose above $98 a barrel for the first time last week and has gained 56 percent this year, adding to pressure on global inflation as well as economic growth. Australia's central bank raised its inflation forecasts today.

Bernanke, Trichet

U.S. Federal Reserve Chairman Ben S. Bernanke told Congress last week that oil prices threaten both ``renewed upward pressure'' on inflation and ``further restraint on growth.'' European Central Bank President Jean-Claude Trichet said he still sees a danger that inflation will accelerate.

Japan's central bank Governor Toshihiko Fukui said this month that reports of price increases of gasoline and daily goods are leading consumers to expect higher prices. He also said profits of small businesses are being eroded as they absorb the higher costs, and that's keeping the lid on wages.

``It's true that small businesses are having more difficulty passing through higher oil and other costs'' than large companies, Fukui said on Oct. 31. ``We understand their difficulty is weakening the transfer of incomes from the improving corporate sector to households.''

The Bank of Japan will keep its key overnight lending rate at 0.5 percent tomorrow amid concern that economic growth will slow and financial markets remain volatile, according to all 37 economists surveyed by Bloomberg News.

Stocks, Yen

Japan's Nikkei 225 Stock Average fell 3.1 percent as of 12:36 p.m. in Tokyo to 15,094.78, the lowest in more than a year. The yen has gained 2.5 percent against the dollar this month.

From a month earlier, producer prices rose 0.3 percent in October. Prices would have risen 0.5 percent if summer discounts for electricity charges were excluded, according to Junichiro Takeuchi, a central bank official.

Wholesale inflation was tempered by a drop in prices of construction materials as housing investment tumbled. Prices of lumber and wood products mainly used for building fell 0.4 percent from September and 0.1 percent from a year earlier, the central bank said.

Japan's housing starts plunged 44 percent to the lowest level in four decades in September, as stricter rules made it harder to obtain building permits, causing delays.

The central bank plans to reshuffle the basket of items in the producer-price index and recalculate previous data using a new base year of 2005. It will publish revised numbers from January 2005 to September 2007 on Dec. 4.

The revision may push down producer prices by as much as 1 percentage point, said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

Last Updated: November 11, 2007 22:40 EST