Japan wholesale prices hit record 10% as energy costs soar

Women wearing protective masks walk in a shopping district, amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, February 15, 2022. REUTERS/Kim Kyung-Hoon

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  • April wholesale prices rise 10.0% yr vs. f’cast +9.4%
  • Falling yen pushes up import prices and hurts businesses
  • Core CPI on Friday set to rise faster than BOJ’s April target

TOKYO, May 16 (Reuters) – Wholesale prices in Japan in April jumped 10% from the same month a year earlier, data showed on Monday, rising at a record pace as Ukraine’s crisis and weak of the yen have pushed up the cost of energy and raw materials. materials.

The surge in the Business Goods Price Index (CGPI), which measures the price businesses 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 follows a revised 9.7% increase in March and was above the median market forecast for a 9.4% increase.

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Unlike other central banks which are worried about soaring inflation, the Bank of Japan (BOJ) has maintained its ultra-loose monetary policy, believing that rising cost inflation does not bring long-term price expectations at its 2% target. .

“Companies have tried to absorb the rising costs through their efforts, but since last year it has become more difficult for them to bear,” said Takeshi Minami, chief economist at the Norinchukin Research Institute.

“They will have no choice but to pass on these additional costs.”

Japanese companies have been slow to pass on rising costs to households, as weak wage growth is doing little to improve consumer confidence and making them cautious about scaring off consumers with price hikes.

The yen-based import price index jumped 44.6% in April from a year earlier, data showed on Monday, a sign that recent declines in the yen are inflating the cost of imports for Japanese companies.

Last month, the BOJ forecast that core consumer inflation would hit 1.9% in the current fiscal year which started last month before moderating to 1.1% over the years. 2023 and 2024 – a sign that she views the current price increases as transitory. Read more

But analysts expect consumer inflation to hover around 2% in the coming months as high commodity costs force more companies to raise prices, posing a risk to the economy. Japan’s fragile economic recovery.

“It all ultimately depends on whether or not consumers accept price increases,” Minami said. “While they’re likely to be OK with it to some extent, they won’t fully accept it, leading to lower spending.”

Friday’s data is expected to show Japan’s core consumer price index (CPI), which excludes volatile fresh food costs but includes energy costs, rose 2.1% in April from from a year earlier, slightly beating the BOJ’s target, according to a Reuters poll last week. Read more

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Reporting by Daniel Leussink; Additional reporting by Kentaro Sugiyama; Editing by Kenneth Maxwell and Jacqueline Wong

Our standards: The Thomson Reuters Trust Principles.

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