TOKYO (REUTERS) – Japan’s wholesale prices rose 4.9 per cent in May from a year earlier to mark the biggest increase in 13 years, data showed on Thursday (June 10), indicating that higher commodities costs could hit companies slowly emerging from the COVID-19 pandemic’s pain.
The gain in the corporate goods price index (CGPI), which measures the prices companies charge each other for their goods, was more than market forecasts for a 4.5 per cent increase and followed a 3.8 per cent rise in April, Bank of Japan data showed.
It was the biggest annual increase since September 2008.
“Rising commodities prices reflecting the global economic recovery is pushing up wholesale prices for a broad range of goods,” Shigeru Shimizu, head of the BOJ’s price statistics division, told a briefing.
“The data shows companies are starting to pass on rising costs, though the gain in wholesale prices is driven more by external factors rather than domestic demand,” he said.
Oil and coal prices jumped 53.5 per cent in May from a year earlier, while prices of nonferrous metals were up 41.6 per cent, as robust US and Chinese demand boosted raw material costs, the data showed.
Wood and lumber prices were also up 9.7 per cent, reflecting a shortage of raw material and rising demand across the world, Shimizu said.
Rising costs would pinch margins for many companies including retailers still reeling from state-of-emergency curbs implemented to prevent the spread of the pandemic, clouding the outlook for Japan’s fragile economic recovery.
Companies, on the other hand, have been cautious of passing on the higher costs to households. Core consumer prices fell 0.1 per cent in April from a year, marking the ninth consecutive month of decline – a sign sluggish domestic demand was discouraging firms from raising prices.