Image: Reuters Berita 24 English - According to data released on Tuesday, Japan's yen -based import prices rose at a record rate in Jun...
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| Image: Reuters |
Berita 24 English - According to data released on Tuesday, Japan's yen-based import prices rose at a record rate in June, maintaining high wholesale inflation as the yen's precipitous decline continued to weigh on the country's shaky economic recovery by driving up the cost of commodities.
The information emphasises the difficulty facing Prime Minister Fumio Kishida in reducing the economic damage caused by rising living expenses, which is now a policy priority following his victory in Sunday's upper house election.
According to data from the Bank of Japan, the corporate goods price index (CGPI), which tracks the prices businesses charge one another for items, increased 9.2 percent in June compared to the same month last year.
The increase dropped from a revised 9.3 percent climb in May and a record 9.9 percent surge noted in April, but it still outperformed the consensus market projection of an 8.8 percent gain.
Although the weak yen kept import costs high, the slowdown was caused by a moderating in global commodity price increases and the effect of government subsidies on fuel prices.
The fastest increase on record in imported goods prices, based on the yen, occurred in June and showed that the weakening yen was driving up the price of importing raw materials.
As rising fuel costs increase electricity and gas bills with a lag of several months, analysts warn Japan's significant reliance on fuel imports may prevent wholesale inflation from slowing down much.
According to a BOJ official who spoke at a conference, companies in Japan also frequently alter their price tags at the beginning of each quarter, such as in July and October, so wholesale costs for products like food may rise around that time.
However, it's unclear how easily businesses will be able to continue raising their prices for business and household customers.
According to Atsushi Takeda, chief economist at Itochu Economic Research Institute, "Commodity prices are anticipated to soon peak out given U.S. recession fears" and decelerate Japan's wholesale inflation toward the year's end.
Whether businesses can continue to pass along expenses depends on how strong the eventual demand is expected to be.
