Japan Wholesale Prices:

 https://mainichi.jp/english/articles/20201012/p2g/00m/0bu/049000c

Article:

TOKYO (Kyodo) -- Wholesale prices in Japan dropped 0.8 percent in September from a year earlier, weighed down by falling energy prices and sluggish domestic demand amid the coronavirus pandemic, the Bank of Japan said Monday.

The price of goods traded between companies, which impacts consumer prices, fell for the seventh straight month, posting a continued challenge to the central bank's efforts to hit its 2 percent inflation target.

ideas:

A fall in energy prices can be both a positive or a negatives depending on what side of the equation a family, individual, or company is on.

In the normal supply and demand scenario, whenever there might be an over-supply in the market, such as oil, that would be pressure for prices to decrease.

So suppliers would not like that. And of course another reason might be the demand for a commodity such as oil has decreased, which again would pressure for prices to decrease.

So trade between companies during the pandemic, might have caused wholesale prices to drop. Supplies might have grown because there was less demand. If there is less demand, most likely suppliers are going to lower the prices and an incentive to increase sales and or try to salvage some profits.

Article:

Economic activity has gained traction after it fell away due to the spread of the novel coronavirus earlier in the year, although the BOJ still views economic conditions as severe.

Prices of petroleum and coal products tumbled 13.9 percent, reflecting a sharp year-on-year drop in crude oil prices. Among other decliners in energy-related products, electricity, gas and water prices decreased 4.6 percent while chemical and related products fell 5.5 percent, according to the BOJ data.

Ideas:

Decreasing oil and energy prices might seem like a good thing if you are a consumer of such commodities. But in reality, constant low prices in the long run might not be good for an economy. 

Maybe in the short run it might help consumers, but overall, it might not be good for both suppliers and consumers of oil or energy commodities.

There needs to be a balance in the prices for good the good of all in an economy. Too high and consumers suffer and they will find way to limit energy consumption which doesn't help the suppliers. 

Too low and that doesn't help the suppliers who have to make a profit or they might not stay in that commodity market.

Article:

"As the impact of coronavirus infections lingers globally, the pace of recovery in economic activity has been modest, which continues to weigh on wholesale prices," a BOJ official said.

Reflecting weak domestic demand, prices of lumber and wood products as well as those of coal and iron fell 1.1 percent, respectively.

Import prices dropped 10.1 percent and export prices decreased 1.5 percent, both in yen terms.

Ideas:

Wholesale prices can be attributed to two possible factors. One being the demand for a product and two to cost of resources needed to make the products.

If demand is too low or continues to be too low for too long, wholesalers might have no choice but to lower their prices to either re-capture lost sales and profits.

The other being if prices needed for intermediate good becomes too high, then again they might have no choice but to "pass on" the increase in costs to the next in the supply chain.

And or if the wholesaler, who is the middleman in the supply chain sees his prices rising because the original supplier had to raise his prices because of the increase in resource costs then maybe the wholesaler has no choice but to "pass on" the costs to the next one in the supply chain.

But then there is another factor. Suppose resource costs are increase and then at the end of the supply chain, such as overall demand in the economy is decreasing like in the pandemic what are all the suppliers in the supply chain supposed to do.

So you have resource costs increasing, so the original suppliers have to pass on the costs to the next group in the supply chain such as the wholesalers, so their costs are increasing and then they decide they need to pass on all or some of the costs to the next group in the supply chain, for example lets say the retailers, and then they see their costs increasing and they feel they have no choice but to pass on some or all of the increase in costs.

But there is one major problem. Demand is down in the economy because of the pandemic and there is possibly no end in sight as to when demand might begin to return to some kind of normal.

So now the supply is in the new normal.

Have a nice day and be safe!