According to the Bank of Japan (BOJ), Japanese producer prices rose 8.6% year-on-year in January 2022. The reason is said to be the rising energy and commodity prices, which caused wholesale prices to rise for the eleventh month in a row.
Producer prices had already risen by 8.7% year-on-year in December 2021, partly due to the weakening of the yen. As a result, prices for imported goods rose by 37.5%, while export prices increased by 12.5%.
Economists and BOJ policymakers have been keeping an eye on the current upward trend in producer prices to see how it affects consumer prices. This is because core inflation has also been rising in recent months, but is still far from the BOJ’s 2% inflation target.
Bank of Japan (BOJ) Governor Haruhiko Kuroda has expressed that the BOJ will not discuss ending its ultra-loose monetary policy and it will not do so as long as Kuroda is in office until April. 2023
“As long as our current price forecasts hold, there is no reason for us to discuss ending the policy. We’re not discussing it. Nor would that be appropriate given the price trends in Japan.”
“It is very unlikely that inflation will increase dramatically on the Japanese consumer side, as the household sector has not yet been affected by the price increase.”
“The key is rising wages,” Kuroda added. Noting that wages are rising steadily. They will play a key role in pushing consumer inflation toward the BOJ’s 2% target in a sustainable manner.
“Japan’s economic recovery is lagging behind the U.S. and European countries. And consumer inflation was only 0.5%, so there was no need to reduce monetary stimulus or make policy more restrictive.”