By Tetsushi Kajimoto
TOKYO – Japanese corporate goods prices grew the most in five months in September, Bank of Japan data showed on Thursday, highlighting the squeeze on business profits from persistently strong wholesale inflation.
The 9.7 percent year-on-year rise in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, was much bigger than a median market forecast for a 8.8 percent increase, BOJ data showed.
It was the biggest annual increase since a 9.8 percent rise registered in April, underlining the stiff margin pressure facing businesses as many of them struggle to pass on the costs to consumers.
A weak yen, which inflates the cost of imports, has exacerbated already high wholesale inflation from a global surge in commodity prices.
The yen-based import price index rose 48.0 percent year-on-year in September, after a revised 43.2 in August and a revised 49.2 percent in July, the data showed.
That combination has driven the index, at 116.3, to a record high since the survey began in 1960. Electricity bills for business and urban gas utility were the main contributors to the uptick in costs, reflecting rises in fuel costs for the second quarter.
The month-on-month input cost pressure also remained strong, with wholesale prices up 0.7 percent in September from August, when it increased 0.4 percent.
After failing to achieve the 2 percent inflation goal for nearly a decade, the BOJ is finally seeing consumer inflation exceeding 2 percent but for the wrong reasons – soaring fuel and raw material costs largely blamed on the Ukraine crisis.
In a sign cost-push inflation may not be sustainable, however, a separate BOJ survey showed on Thursday household inflation expectations turned somewhat weaker.
The ratio of households expecting prices to be higher a year from now stood at 85.7 percent in September, down from 87.1 percent in June, which was the highest level since June 2008, the quarterly BOJ survey showed. – Reuters
