Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

BOJ flags broadening price, wage hikes in wake of policy tweak

Published Jul 31, 2023 01:36AM ET Updated Jul 31, 2023 03:10AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People walk in front of the bank of Japan building in Tokyo, Japan, April 7, 2023. REUTERS/Androniki Christodoulou//File Photo/File Photo

By Leika Kihara

TOKYO (Reuters) -Japanese companies are raising prices and wages at a pace not seen in the past, the Bank of Japan (BOJ) said on Monday, stressing the need to watch for signs that inflationary pressures were broadening.

Price hikes have spread rapidly among Japanese companies and sectors that had previously been cautious about passing on costs to households, the central bank said.

"We must continue to scrutinise whether price hikes to pass on higher costs could broaden and last longer," the central bank said in a full version of its quarterly outlook report.

Unlike the United States and Europe, however, Japan is still seeing inflation driven by higher goods prices rather than wage pressures, the BOJ said.

The gross-domestic-product (GDP) deflator, which strips away the effect of import prices, has risen at a much slower pace in Japan than in the United States and Europe, it said.

The data "suggests the rise in Japan's inflation is mainly driven by cost-push pressure from rising import prices," the report said.

But companies are becoming more open to raising pay, the BOJ said, stressing the need to scrutinise how such wage moves could affect the outlook for inflation.

The assessment of the price and wage outlook came after the central bank's decision on Friday to tweak its bond yield control policy and allow long-term interest rates to rise in line with inflation.

In a summary of its outlook report released on Friday, the BOJ sharply revised up this year's inflation forecast as a wide range of firms passed on higher costs to households.

The bank also upgraded its assessment on inflation expectations to say they were "showing signs of re-accelerating," reflecting its growing alarm about broadening inflationary pressure.

The outlook for wages and inflation expectations is crucial to how quickly the BOJ could move towards dismantling its controversial bond yield control policy.

Core consumer inflation hit 3.3% in June, staying above the BOJ's 2% target for the 15th straight month and keeping the central bank under pressure to phase out its massive stimulus.

BOJ flags broadening price, wage hikes in wake of policy tweak
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email