BY LEIKA KIHARA
TOKYO- Japan’s annual wholesale inflation jumped to a seven-month high of 4.2 percent in January and accelerated for the fifth straight month, highlighting persistent price pressures and reinforcing market bets of another interest rate hike this year.
The data came in the wake of Bank of Japan Governor Kazuo Ueda’s warning on Wednesday that continued rises in food costs could affect the public’s inflation expectations, underscoring the central bank’s focus on upside price risks.
While analysts expect inflationary pressure from rising raw material costs to persist, some caution the hit to consumption could discourage the BOJ from raising interest rates too soon.
“While wages are rising solidly, elevated food and energy costs are weighing on consumer sentiment and delaying a pick-up in household spending,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “There’s little reason for the BOJ to accelerate the pace of rate hikes,” he said.
The rise in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, exceeded a median market forecast for a 4.0 percent increase and followed a revised 3.9 percent increase in December.
It was the highest annual rise since a 4.5 percent gain in June 2023. Agriculture goods prices soared 36.2 percent and food costs were up 2.9 percent on steady rises in the price of rice, eggs and meat.
While a phase-out of government subsidies pushed up energy costs, price rises were broad-based including those for textiles, plastic and non-ferrous metals, the data showed.
An index of yen-based import prices rose 2.3 percent in January from a year earlier after a revised 1.4 percent gain in December, the data showed, a sign the yen’s weakness continued to inflate costs for companies.
Import prices may rise further as hot US inflation data on Wednesday led to receding market expectations of near-term US interest rate cuts, lifting the dollar to a one-week high against the yen.
