Japan Wholesale Prices:

 Article Source:  https://mainichi.jp/english/articles/20221212/p2g/00m/0bu/017000c

Article:

TOKYO (Kyodo) -- The wholesale price index hit its highest level again in November, with prices of goods traded between companies surging 9.3 percent from a year earlier, Bank of Japan data showed Monday, underscoring the contribution of surging energy costs and a weaker yen to inflationary pressure.

The key index stood at 118.5, the highest since comparable data became available in 1960. Wholesale prices, which affect consumer prices with a lag, rose for the 21th straight month, staying above 9 percent for almost a year.

The pace of increase, however, slowed somewhat in November from a revised 9.4 percent in the previous month.

Ideas:

It seems that wholesale companies have no problems passing on their price increases to other wholesale companies but it seems that maybe companies who deal directly with the end consumer might not be as willing to pass on their costs for fear of losing customers.

Wholesale prices might affect consumer prices eventually but just how long which is take for consumers to feel the effects of wholesale prices which might eventually be passed on to the end consumer.

An increase of 9 percent, across the board might not like that much but if enough products see an increase of 9 percent it can have a huge effect on the economy overall.

Article:

The yen's weakening, particularly against the U.S. dollar, has been boosting the import costs of everything from energy and raw materials to food items. Import prices jumped 28.2 percent from a year earlier, compared with a 15.1 percent gain in export prices.

As a growing number of companies have passed on higher costs by hiking retail prices, rises in consumer prices have also stayed above the BOJ's 2 percent target in recent months. The price trend has not changed the bank's view that the recent inflation will not last long and that the current ultralow rate policy should be maintained.

Electricity, city gas and water prices gained 49.7 percent, with the pace of rise accelerating from a revised 44.1 percent a month earlier.

Ideas:

Normally as weak yen, in past years, has not been that much of a challenge, but you add in increases in material costs, increasing in energy costs combined with the weak yen it becomes a major challenge for companies and consumers.

As everything become more expensive, companies which usually just absorb the price increases now have no choice as their profits margins are getting smaller and smaller, to pass on some or all of their price increases to the next in the supply chain including the final consumer.

It must be remembered the that Bank of Japan 2 percent target was related to consumer demand and consumer spending and not so much wholesale price increases.

Article:

Iron and steel prices saw a 20.9 percent increase while those of food were up 7.2 percent.

The pace of gain in petroleum and coal products, which had soared amid Russia's war on Ukraine, slowed to 0.5 percent, with the surge taking a breather as monetary tightening by major central banks raises concerns about a global economic slowdown.

The contrasting monetary policies of Japan and its peers in the United States and Europe had weakened the yen but such selling pressure on the Japanese unit has been easing in recent weeks.

Ideas:

Material price increases and the combination of the weak yen has got to be causing major challenges for companies who have to constantly adjust their budgets or plans because of of the weak yen and or material cost increases.

Hopefully some or many companies can negotiate contracts with energy and material companies that set price increase limit on prices up to a certain period of time. 

And with the yen they might be able to buy US dollars as needed to overcome the weak yen situation.

Yes, there is the possibility of a global economic slowdown with the US and the EU maybe still increasing their rates while Japan has done the complete opposite. 

The question maybe should be asked, what if the Japan had followed what the US has done, would it have made any difference related to the price increases Japan sees now? Most likely not as the US is still experiencing price increases on a daily basis.

Have a nice day and be safe!