TOKYO- Four out of five large Japanese firms are passing on higher commodity costs to customers or intend to do so, a Reuters poll found, a sharp rise from the previous survey six months ago as surging input prices and a weak yen drive up import costs.
Almost three quarters of firms polled also intend to lift prices of their main goods and services in the latter half of this year, illustrating a shift away from a cautious, deflationary price-setting mindset.
For years, Japanese firms have cut or kept prices steady, fearing that raising prices could scare away consumers accustomed to cheaper goods and services, in turn sending prices and wages into a downward spiral.
The Corporate Survey found 21 percent of big Japanese firms are passing costs to clients while 57 percent plan to transfer costs eventually. About one in five have not been able to do so.
That marked a sharp increase from the previous survey taken at the start of this year, in which 43 percent of big firms planned to transfer costs and 36 percent were not able to do so.
The poll highlighted the corporate response to cost-push, rather than demand-pull, inflation that has accelerated since Russia invaded Ukraine in February, prompting firms to lift prices of items as varied as food, fuel and cosmetics. Russia calls its actions in Ukraine a “special operation”.
While the cost-push inflation is seen unsustainable without substantial wage hikes, many firms said they have no choice but to raise prices to make ends meet as input costs surge.
“We are passing on costs little by little. What’s worrying is that we may not be able to transfer costs if demand drops,” a chemicals maker manager wrote in the survey on condition of anonymity.
“We have transferred much of the costs of raw materials price hikes from the past but we still need to pass on further costs wrought by the weak yen and surging fuel prices,” wrote a wholesaler manager. – Reuters
