TOKYO: Japanese wholesale prices marked their first annual increase in more than a year in March, a sign that rising commodities costs are pinching corporate margins and adding inflationary pressure to the world’s third-largest economy.
Japan’s corporate goods price index (CGPI), which measures the price firms charge each other for their goods and services, rose 1 per cent in March from a year earlier, Bank of Japan (BOJ) data showed on Monday, marking the first rise in 13 months, report agencies.Markets are turning their attention to the return of inflation as advanced economies recover from the impact of the Covid-19 pandemic last year, forcing some central banks to offer reassurances that a brief uptick in prices won’t trigger a withdrawal of stimulus.
Analysts, however, expect the fallout on consumer inflation to remain more modest in Japan than in the United States, as soft wage growth and slow vaccines rollouts are seen weighing on Japan’s household spending.
The March jump in wholesale prices, which was at the fastest pace since January 2020, exceeded a median market forecast for a 0.5 per cent increase and followed a 0.6 per cent fall in February. “While there’s still a lot of uncertainty on the outlook, global economic activity is picking up and keeping commodities prices high,” said Kouta Fujiwara, an economist at NLI Research Institute. “Given the base effect of last year’s sharp fall, Japan’s wholesale inflation may spike to around 3 per cent from April,” he said. Most of the gain in March wholesale prices was driven by a 29 per cent spike in prices of non-ferrous metals goods and 9.8 per cent rise in those for oil products and coal, showing how a rebound in global demand for commodities pushed up costs for Japanese firms. Compared with a month ago, wholesale prices jumped 0.8 per cent in March to mark the biggest gain since October 2019. “The increase is driven mostly by recoveries in US and Chinese economies, which are pushing up global commodities prices, rather than a rebound in domestic demand,” said Shigeru Shimizu, the head of a BOJ division overseeing price moves.