Weak yen pushes up Japan’s wholesale import costs at record pace

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TOKYO — Japan’s wholesale inflation moderated in Could however yen-based import costs surged at a file annual tempo, information confirmed on Friday, an indication the foreign money’s sharp decline was including to pressure for the economic system closely reliant on commodity imports.

The info casts doubt on the central financial institution’s argument that households’ rising dwelling prices are due largely to international commodity inflation, and has little do to with a weak yen.

The company items value index (CGPI), which measures the value of products firms cost one another, rose 9.1% in Could from a yr earlier, Financial institution of Japan (BOJ) information confirmed, smaller than a median market forecast for a 9.8% acquire.

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The tempo of improve slowed from a file 9.8% rise in April, due largely to the impact of presidency subsidies aimed toward capping gasoline costs.

However the index, at 112.8, hit a file excessive as greater than 80% of elements noticed costs rise from year-before ranges.

The yen-based imported items costs surged 43.3% in Could from a yr earlier, the quickest tempo of acquire since comparable file grew to become accessible in January 1981.

“Worth hikes are broadening significantly for meals and beverage objects,” Shigeru Shimizu, head of the BOJ’s value statistics division, advised a briefing.

“The large image stays the identical in that rising international commodity prices are pushing up Japan’s wholesale costs.”

Beverage and meals costs rose 4.6% final mont year-on-year, accelerating from the earlier month’s 4.1% acquire, the info confirmed.

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Whereas gasoline costs fell 5.6% in Could from April, they’d have risen 1.1% with out the federal government’s subsidies, Shimizu stated.

World commodity inflation pushed by the struggle in Ukraine and the yen’s falls to two-decade lows have pushed up wholesale costs in Japan, squeezing retailers’ earnings.

Firms are steadily passing on the upper prices to households. Core shopper costs rose 2.1% in April from a yr earlier, a lot slower than the tempo of improve in Western economies however exceeding the BOJ’s 2% goal for the primary time in seven years.

BOJ Governor Haruhiko Kuroda has repeatedly stated a weak yen advantages Japan’s economic system in broad phrases, and that the financial institution gained’t increase rates of interest in response to what it sees as momentary, cost-push inflation.

However opposition lawmakers are turning up the warmth on the BOJ, blaming it for the rising price of dwelling forward of an higher home election subsequent month. (Reporting by Leika Kihara Enhancing by Chang-Ran Kim, Cynthia Osterman & Shri Navaratnam)