Japanese wholesale prices up 9% in August

Wholesale prices in Japan rose by 9% year-on-year in August. This is in line with the annual growth rate in July and indicates that persistently high raw material costs are putting pressure on companies’ profit margins.

Bank of Japan (BOJ) data showed that the increase in the corporate goods price index (CGPI), which measures the prices companies charge each other for goods and services, was mostly in line with market forecasts, rising by 8.9% on average.

At 115.1 points, the index reached a high for the fifth consecutive month, indicating that Japan is still feeling the effects of higher global commodity prices.

Despite the recent decline in global crude oil and commodity prices, prices for fuels and scrap metals have been under pressure, but prices for a number of products that directly affect retailers, such as utilities and electronics, have increased.

As a result of the easing pressure on production factors, however, wholesale prices rose by only 0.2% in August compared with the previous month. This was a slower increase than the 0.7% in July.

Yen-denominated import prices rose 42.5% in August from a year earlier, following a 49.1% increase in July.

The weakening of the yen caused the cost of importing raw materials to skyrocket. This is affecting corporate profits and forcing more companies to raise prices.

Japanese core consumer inflation reached 2.4% in July, the fastest annual growth rate in seven years.

However, as inflation remains modest compared to other advanced economies, the BOJ has pledged to keep interest rates extremely low.

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