Japan wholesale inflation hits 13-year high as import costs rise

[TOKYO] Japanese wholesale prices rose in July at their fastest annual pace in 13 years, data showed on Thursday, a sign the global commodity inflation and a weak yen were pushing up raw material import costs for a broad range of goods.

There is uncertainty, however, on whether companies will start to pass on the higher costs to households and prop up consumer inflation, which remains stuck around zero due to weak consumption, unlike in other advanced nations, analysts say.

The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, rose 5.6 per cent in July from a year earlier, Bank of Japan data showed, beating a median market forecast for a 5.0 per cent gain.

It accelerated sharply from a 5.0 per cent increase in June and marked the fastest pace of growth since September 2008, when the index rose 6.9 per cent, the data showed.

On a month-on-month basis, wholesale prices rose 1.1 per cent in July after gaining 0.6 per cent, marking the biggest increase since October 2019, the data showed.

Wholesale prices rose for many raw materials including those for wood prices, which spiked 33.1 per cent in July from a year earlier, and oil and coal goods, which saw prices rise 38.8 per cent, the data showed.

"We're seeing a wide range of wholesale price goods rise reflecting the global recovery, which is pushing up commodity costs," said Shigeru Shimizu, head of the BOJ's price statistics division.

"Japan's wholesale prices will likely remain under upward pressure for the time being, though there's uncertainty on how a global resurgence in Covid-19 infections could affect the outlook," Mr Shimizu told a briefing.

Japan's economy is recovering moderately as robust exports offset some of the weakness in consumption. But a resurgent coronavirus forced Japan to reimpose state of emergency curbs, casting doubts over the strength of the recovery.

REUTERS