Japan May Wholesales Prices: Ideas Later.

Japan's wholesale prices up 6.3% in May, fastest rise in over 3 years

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TOKYO (Kyodo) -- Japan's wholesale prices rose at their fastest pace in over three years in May, up 6.3 percent from a year earlier, highlighting rising inflationary pressures in Japan due to the Middle East conflict, the Bank of Japan said Wednesday.

The data showed the pace of increase accelerated from a revised 5.3 percent in April, reinforcing the view that the BOJ is on course to raise its key policy rate when the Policy Board meets next week.

After leaving the benchmark rate unchanged for a third consecutive policy meeting, the central bank is expected to lift it to a 31-year high of 1.00 percent from the current 0.75 percent amid growing inflation risks posed by elevated crude oil prices, according to sources familiar with the matter.

Wholesale prices, which are the prices at which goods trade between companies, affect consumer prices with a delay.

The 6.3 percent year-on-year increase was the largest since March 2023.

Resources-poor Japan has depended heavily on imports from the region before the U.S.-Israeli attacks on Iran in late February led to the effective closure of the Strait of Hormuz. In response, the country has promoted purchases from alternative sources albeit at a higher cost.

Concerns have grown that the increases in wholesale prices will be reflected in the prices of products and services purchased by ordinary households.

Petroleum and coal products gained 13.8 percent from a year earlier, while chemicals and related products including materials made from oil-derived naphtha, climbed 13.4 percent, the data showed, reflecting disruptions in oil and derivative supplies from the Middle East.

A BOJ official said the data for the reported month shows that price hikes have been spreading from the upstream stage, represented by oil and coal products, to the midstream, such as polyethylene and other chemicals used in a wide range of products.

"Generally speaking, companies are likely to pass on rises in raw materials costs to prices of their products and services, or their profits would be hit," the official said, expressing the view that price hikes will continue broadly.

Import prices surged 25.5 percent from a year earlier, the largest gain since November 2022, propelled by rises in metals and petroleum, coal and natural gas amid the yen's weakness. Export prices jumped 20.6 percent, led by hikes among electric and electronic products.

Article source:  https://mainichi.jp/english/articles/20260610/p2g/00m/0bu/017000c