© Reuters. FILE PHOTO: A shopper looks at alcohol products in the aisle of a luxury food store in Tokyo September 25, 2014. REUTERS / Yuya Shino
By Leika Kihara
TOKYO (Reuters) – Japan’s wholesale inflation remained near a record high in March as the Ukraine crisis and a weak yen pushed up fuel and raw materials costs, data showed on Tuesday. put additional strain on a resource-poor economy that relies heavily on imports.
While a rise in wholesale prices should help accelerate consumer inflation towards the central bank’s elusive 2% target, it could hurt an economy still reeling from the coronavirus pandemic. said the analyst.
The Corporate Goods Price Index (CGPI), a measure of the prices companies charge each other for their goods and services, rose 9.5% in March from a year earlier, data showed. whether show.
That followed a revised 9.7% spike in February, which was the fastest on record and exceeded the average market forecast for a 9.3% gain. The March index, at 112.0, was the highest since December 1982, the Bank of Japan (BOJ) said.
“With the cost of raw materials rising so much, companies won’t be able to make money unless they raise prices,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Core consumer inflation could rise to around 2.5% by the end of the year and stay above 2% for longer than initially expected, affecting consumption and the economy,” he said. .
The yen-denominated import price index rose 33.4% in March from a year earlier, the data showed, a sign that the yen’s recent decline is increasing import costs. of Japanese companies.
Japanese firms have been slow to pass on rising costs to households as soft wage growth weighs on consumption, leaving consumer inflation far below the BOJ’s 2% target.
But analysts expect core consumer inflation to rise about 2% from April due to soaring fuel costs and the negative impact of past mobile phone fee cuts.
Rising inflationary pressures increase the likelihood that the BOJ will revise its inflation forecast at its next quarterly review on April 28, analysts said. The bank’s current forecast is for core consumer inflation to hit 1.1% for the year starting in April.