Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

Japan's wholesale inflation stays near record on Ukraine war, weak yen

Published 04/11/2022, 10:16 PM
Updated 04/11/2022, 10:20 PM
© Reuters. FILE PHOTO: A shopper looks at alcohol products at an aisle in a luxury food store in Tokyo September 25, 2014. REUTERS/Yuya Shino

By Leika Kihara

TOKYO (Reuters) -Japan's wholesale inflation remained near record-high levels in March as the Ukraine crisis and a weak yen pushed up fuel and raw material costs, data showed on Tuesday, adding strains to the resource-poor economy heavily reliant on imports.

While rising wholesale prices will help accelerate consumer inflation toward the central bank's elusive 2% target, it could hurt an economy still reeling from the coronavirus pandemic, analysts say.

The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, rose 9.5% in March from a year earlier, data showed.

That followed a revised 9.7% spike in February, which was the fastest pace on record, and exceeded a median market forecast for a 9.3% gain. The March index, at 112.0, was the highest level since December 1982, the Bank of Japan (BOJ) said.

"With raw material costs rising so much, companies won't be able to make money unless they raise prices. The days of discount war are over," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"Core consumer inflation may accelerate to around 2.5% later this year and stay above 2% for longer than initially expected, weighing on consumption and the economy," he said.

The yen-based import price index jumped 33.4% in March from a year earlier, the data showed, a sign the yen's recent declines are inflating the cost of imports for Japanese firms.

Japanese companies have been slow in passing on rising costs to households as soft wage growth weighed on consumption, keeping consumer inflation well below the BOJ's 2% target.

© Reuters. FILE PHOTO: A shopper looks at alcohol products at an aisle in a luxury food store in Tokyo September 25, 2014. REUTERS/Yuya Shino

But analysts expect core consumer inflation to accelerate around 2% from April due to surging fuel costs and the dissipating effect of past cellphone fee cuts.

The rising inflationary pressure heightens the chance the BOJ will revise up its inflation forecast at its next quarterly review due April 28, analysts say. The bank's current forecast is for core consumer inflation to hit 1.1% in the year that began in April.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.