More Japan firms to pass on costs of rising commodity prices, weak yen

Jul 14, 2022 | News On Japan

Jul 14, 2022 (marketscreener.com) - Four out of five large Japanese firms are passing on higher commodity costs to customers or intend to do so, a Reuters poll found, a sharp rise from the previous survey six months ago as surging input prices and a weak yen drive up import costs.

Almost three quarters of firms polled also intend to lift prices of their main goods and services in the latter half of this year, illustrating a shift away from a cautious, deflationary price-setting mindset.

For years, Japanese firms have cut or kept prices steady, fearing that raising prices could scare away consumers accustomed to cheaper goods and services, in turn sending prices and wages into a downward spiral.

The Corporate Survey found 21% of big Japanese firms are passing costs to clients while 57% plan to transfer costs eventually. About one in five have not been able to do so.

That marked a sharp increase from the previous survey taken at the start of this year, in which 43% of big firms planned to transfer costs and 36% were not able to do so.

In a sign that tame wages are unlikely to offset price hikes, 41% of firms saw employees' overall wages grow 1% to 3% this fiscal year and one third saw them flat, the survey showed.

Fewer than one of five firms plan to raise overall pay by 3% to 5% or more, dashing Prime Minister Fumio Kishida's hope for profitable firms to raise workers' salaries by more than 3%.

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