Japan June Wholesale Prices:

 https://mainichi.jp/english/articles/20210712/p2g/00m/0bu/074000c

Article:

TOKYO (Kyodo) -- Wholesale prices in Japan surged 5.0 percent in June from a year earlier, due to rising commodity prices amid hopes for an economic recovery from the coronavirus pandemic, Bank of Japan data showed Monday.

The prices of goods traded between companies marked the fourth monthly increase and followed a revised 5.1 percent rise in May.

Among major gainers, petroleum and coal products jumped 42.0 percent from a year earlier, and nonferrous metal prices gained 37.6 percent.

Ideas:

The rise of prices can sometimes, be related to two ideas; the first being the expectation of increased demand for certain products in the future.

Or the already increase in demand for products.

But to see the increase in prices from a year earlier of course is or was related to a decrease in demand when the pandemic hit a year ago.

Also domestic and global logistical challenges might have contributed to the increase in prices.

Article:

As economic activity picks up in parts of the world where COVID-19 vaccinations have progressed, demand for products such as woods and scrap also rose. Prices of lumber and wood products increased 18.6 percent, while those of scrap soared 74.8 percent, the BOJ data showed.

"The global economic recovery boosted prices of commodity and a wide range of products," a BOJ official said.

Japan's economy has benefited from rising demand from its major trading partners such as the United States and China. But the country is still battling with rising coronavirus cases, with Tokyo placed under a fourth COVID-19 state of emergency less than two weeks before the Tokyo Olympics.

Ideas:

The global economy is/was on track for some kind of recovery, but with the surge in the variants now, Q3 and the summer period might not be as robust as expected.

It seems in many countries the variants has increased despite the continued vaccination globally.

However, at the same time, Japan and South Korea, seemed to have been hit especially hard related to the new variants

Not to place blame, but most likely in both countries, either a lack of supply and or a lack or getting enough vaccines might be causing some challenges now.

Article:

Inflation worries have emerged in the United States and some European nations in recent months. Japan has so far not seen such concerns emerge as the BOJ is still far from achieving its 2 percent inflation target. Wholesale prices affect consumer prices.

Companies are seen as reluctant to pass surging raw material costs onto consumers at a time when demand remains subdued. But their failure to hike prices could hurt their profits, economists say.

Import prices gained 28.0 percent from a year earlier while those of exports increased 11.3 percent, both on yen terms.

Ideas:

Inflation might be considered both a positive or a negative depending on which side of the equation you are on.

If you are a consumer, such as a person or household or even a business consumer, buying from another business, a rise in prices might not be a positive.

But if you are a supplier, inflation might be seen as positive to you, as now there is more demand for your products

Of course as a supplier, if you have to buy intermediate products for your final products, and the prices of those products are increasing, then you might not like that.

So then you might "pass on" the increased costs to whomever buys your final products in the marketplace.

Yes, suppliers might be reluctant to "pass on" the increased cost to buyers, but at one point, to survive, they might have to decide how much can they afford pass on in order to survive, without losing a lot of sales.

As far as the BOJ 2 percent inflation target is concerned, it seems since about 2013 the BOJ has been targeting inflation to help the economy, but without much success.

Perhaps at this time, and especially with the idea that demand is very low in Japan, the BOJ should shelve the idea of trying to reach a 2 percent target, and focus more on helping businesses survive, especially now with an increase in the variants and the new and continued emergency measures in place.

The idea that this summer is going to be somewhat back to normal looks like its not a possibility as of now.

The BOJ and and the Japanese government need to continue to help as many businesses as they can survive.

And when they are helping businesses they are helping consumers, and businesses are consumers too with families.

Demand is not going to get back to normal anytime soon, and the 2 percent inflation rate will not be reached anytime soon until most businesses and most consumers finally feel good about the economy, their jobs, their businesses, and their future.

Have a nice day and be safe!