Japan wholesale prices hit record 10% as energy costs soar

May 16, 2022 | News On Japan

May 16, 2022 (Business Times) - Japan's wholesale prices in April jumped 10 per cent from the same month a year earlier, data showed on Monday (May 16), rising at a record rate as the Ukraine crisis and a weak yen pushed up the cost of energy and raw materials.

The surge in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, marked the fastest year-on-year rise in a single month since comparable data became available in 1981.

The gain followed a revised 9.7 per cent increase in March, and was higher than a median market forecast for a 9.4 per cent increase.

Unlike other central banks worried about surging inflation, the Bank of Japan (BOJ) has kept its ultra-easy monetary policy in place on the view that the cost-push rise in inflation is not bringing long-term price expectations to its 2 per cent target.

Japanese firms have been slow in passing on rising cost to households as soft wage growth does little to help consumer sentiment and makes them cautious about scaring off consumers with price hikes.

The yen-based import price index jumped 44.6 per cent in April from a year earlier, Monday’s data showed, a sign the yen’s recent declines are inflating the cost of imports for Japanese firms.

The BOJ last month projected core consumer inflation to hit 1.9 per cent in the current fiscal year that started last month before moderating to 1.1 per cent in fiscal 2023 and 2024 - a sign it sees current cost-push price rises as transitory.

But analysts expect consumer inflation to hover around 2 per cent in the coming months as the high raw material costs force more firms to hike prices, posing a risk to Japan’s fragile economic recovery.

Source: ANNnewsCH

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