Image: Reuters Berita 24 English - Japan's wholesale inflation declined in May, but yen-based import prices rose at a record annual rate...
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| Image: Reuters |
Berita 24 English - Japan's wholesale inflation declined in May, but yen-based import prices rose at a record annual rate, according to data released on Friday, signalling that the currency's sharp depreciation was straining an economy that is highly dependent on commodities imports.
The data puts doubt on the central bank's assertion that rising household living expenses are mostly linked to global commodity inflation and have little to do with a weak yen.
The corporate goods price index (CGPI), which measures the costs firms charge each other for goods, grew 9.1 percent in May from the same month a year prior, according to data from the Bank of Japan (BOJ), which was less than the market's median forecast of 9.8 percent.
The rate of growth decreased from April's record 9.8 percent increase due in large part to government subsidies designed to reduce fuel costs.
However, the index reached a record high of 112.8 as over 80% of components reported price rises compared to the previous year.
In May, the costs of imported items priced in yen rose by 43.3% compared to the same month the previous year, the most significant increase since comparable data became available in January 1981.
In a briefing, the head of the BOJ's pricing data division, Shigeru Shimizu, noted, "Prices are rising, notably for food and beverage items."
Japan's wholesale prices continue to rise due to rising global commodity costs, but the overall picture remains stable.
Last month, the price of beverages and food grew by 4.6% year-over-year, accelerating from the prior month's 4.1% increase.
Shimizu stated that without government subsidies, fuel prices would have increased by 1.1% from April to May, despite a 5.6% decrease in May compared to April.
Inflation of global commodities induced by the conflict in Ukraine and the yen's slide to 20-year lows has increased wholesale costs in Japan, so squeezing retailer profits.
Companies are increasingly passing on rising costs to consumers. In April, core consumer prices climbed by 2.1% year-over-year, which was significantly slower than the pace of increase in Western nations but met the Bank of Japan's 2 percent target for the first time in seven years.
BOJ Governor Haruhiko Kuroda has emphasised on several occasions that a weak yen is generally advantageous for Japan's economy and that the bank will not raise interest rates in response to what it perceives as temporary cost-push inflation.
Ahead of next month's upper house election, opposition parties are raising pressure on the BOJ, blaming it for the rising cost of living.
