TOKYO- Japan’s yen-based import prices surged at a record pace in June, data showed on Tuesday, keeping wholesale inflation elevated as the currency’s sharp slump continued to weigh on a fragile economic recovery by boosting commodity costs.
The data highlights the challenge Prime Minister Fumio Kishida faces in cushioning the economic blow from rising living costs, which are emerging as a policy priority after his victory in Sunday’s upper house election.
The corporate goods price index (CGPI), which measures the price of goods companies charge each other, rose 9.2 percent in June from a year earlier, marking the 16th consecutive month of increase, Bank of Japan data showed.
The increase, which exceeded a median market forecast for an 8.8 percent gain, slowed from a revised 9.3 percent rise in May and a record 9.9 percent rise marked in April.
The slowdown reflected a moderation in global commodity price rises and the impact of government subsidies on gasoline prices, though the weak yen kept import costs elevated.
The yen-based imported goods prices surged 46.3 percent in June from a year earlier, marking the fastest gain on record, in a sign the currency’s slump was inflating already rising raw material import costs.
Japan’s heavy reliance on fuel imports may prevent wholesale inflation from slowing much, as rising fuel prices push up electricity and gas bills with a lag of several months, analysts say.
Companies in Japan also tend to change price tags at the start of each quarter, such as in July and October, so wholesale prices for goods such as food may perk up around that time, a BOJ official told a briefing.
But there is uncertainty on how smoothly companies can keep charging corporate and household clients more for their goods.
“Commodity prices are likely to soon peak out given US recession fears” and slow Japan’s wholesale inflation toward the year-end, said Atsushi Takeda, chief economist at Itochu Economic Research Institute.
“Whether companies can keep on translating costs depends on how strong final demand will be.”
Japanese imports jumped in May at the fastest pace in six months, buoyed by surging raw material prices and the yen’s decline to two-decade lows, a Reuters poll showed on Friday.
Rising import costs are inflicting increasing pain on Japanese households and domestic-oriented firms, raising questions about the central bank’s stance that the weak yen is beneficial to the economy overall.
Imports by value likely jumped 43.6 percent in May from a year earlier, marking the biggest rise in a single month since November and accelerating from April’s 28.2 percent increase, the poll of 17 economists showed.
Yen-based imported goods prices soared a record 43.3 percent year-on-year in May, Bank of Japan data showed on Friday.
The poll showed exports likely grew 16.4 percent in May, slightly faster than April’s 12.5 percent rise.
