The Bank of Japan reported the country’s wholsesale prices to rise 9.0 percent in November over higher energy costs and a weak yen.
According to the central bank, Japan’s wholsesale prices rose of goods traded between companies gained for the ninth straight month. While continuing to underscore commodity inflation at a time of weak consumer demand after the economy took a hit from the COVID-19 pandemic.
The Bank of Japan also reported the latest 9.0 percent year-on-year rise to be the sharpest following a revised 8.3 percent increase in October since such a comparable data became available in January 1981.
The recent higher wholesale prices are yet to fully affect consumer prices in Japan where accelerating inflation is not a pressing issue. Hence, strengthening the case for the central bank to retain its monetary easing with its 2 percent target still far off.
According to reports, the resource-poor country is susceptible to changes in prices of crude oil and other energy as it relies heavily on imports for the same.
Wholesale price summary from November –
• The prices for petroleum and coal products in the reporting month rose 49.3 percent from a year ago.
• While the prices of lumber and wood products rose 58.9 percent, thus reflecting higher demand as economic activity gained traction.
• The prices for nonferrous metal rose 32.8 percent in the reporting month.
• The prices for gasoline and kerosene rose at high levels as the country heads into winter, when energy demand increases.
• Some food companies have also announced price hikes to pass on rising raw material costs.
• Import prices in the reporting month gained the sharpest gain since January 1981 by 44.3 percent.
• While exports prices in the same month were up 15.0 percent, both in yen terms.
The companies in the country are increasingly facing pressure to pass on higher costs to consumers by raising prices even though they tend to engage them rather than hiking prices for fear of hurting consumer demand.
The BOJ Governor Haruhiko Kuroda mentioned that the yen’s recent weakness can be seen as positive for the country’s economy, while it underlines its profit-boosting effect on exporters and firms with overseas subsidiaries.