Japan’s wholesale inflation slows as global commodity pressure eases

A vendor sells chocolates at a shop in the Ameyoko shopping district in Tokyo, Japan May 20, 2022. REUTERS/Kim Kyung-Hoon

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  • Wholesale prices in July up 8.6% year on year compared to a gain of 9.4% in June
  • Slowdown reflects moderation in global commodity price increases
  • Prices of goods closer to retailers accelerate the pace of gain

TOKYO, Aug 10 (Reuters) – Japanese wholesale prices rose 8.6% in July from a year earlier, data showed on Wednesday, slowing from the previous month’s pace, a sign that inflationary pressure due to rising fuel and raw material costs was easing.

But price growth accelerated for some goods, such as food and machinery, data from the Bank of Japan (BOJ) showed, suggesting that companies continued to pass on higher raw material costs blamed on the war in Ukraine and the weakness of the yen.

The rise in the Business Goods Price Index (CGPI), which measures the price businesses charge themselves for their goods and services, marked the 17th straight month of gains, but slowed from a revised rise 9.4% in June, according to the data.

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“Inflationary pressure from the cost push will gradually weaken,” said Toru Suehiro, an economist at Daiwa Securities. “Inflation could peak soon,” given recent declines in energy costs that are affecting prices of a wide range of goods, he said.

Prices for petroleum and coal products rose 14.7% in July from a year earlier, slowing from a peak of 21.8% in June.

Other products directly affected by global commodity prices, such as lumber and chemicals, also saw the pace of price increases moderate, the data showed.

In contrast, food and beverage prices rose 5.5% in July from a year earlier, following a 4.6% gain in June, underscoring the lingering impact of rising input costs .

The yen-based import price index jumped 48.0% in July, higher than a revised gain of 47.6% in June, a sign that the decline in the yen was playing a major role in the surge in inflation.

Core consumer inflation in Japan remained above the central bank’s 2% target for a third consecutive month in June as the economy faced pressure from high global commodity prices that increases the cost of the country’s imports. Read more

But the BOJ has repeatedly said it is in no rush to withdraw its massive stimulus package, describing recent inflation as largely driven by external factors and unsustainable unless accompanied by stronger wage growth. Read more

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Reporting by Leika Kihara; Editing by Sam Holmes

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