Japan’s wholesale prices spiked 9% in November from a year earlier, data showed on Friday, in a sign supply bottlenecks and rising raw material costs continue to squeeze corporate profits.
The rising cost pressures, coupled with a weak yen that inflates the price of imported goods, adds to pain for the world’s third-largest economy as it emerges from the consumer slump caused by the pandemic.
The year-on-year rise in the corporate goods price index (CGPI), which measures the prices companies charge each other for their goods and services, was higher than a median market forecast for an 8.5% gain.
It exceeded October’s revised 8.3% increase, Bank of Japan data showed.
Domestic final goods prices, which loosely track the consumer price index, rose 2.7% from a year earlier, the data showed.
Caution Over Consumers
While Japan has not been immune to the impact of rising commodity inflation, firms have so far been cautious about passing on higher costs to consumers on concern cost-sensitive households may hold back on spending.
The CGPI data follows news that Japanese machine tool industry orders rose 64% year-on-year. However, there was a 3% decline month-on-month.
“The subsidy effect in Japan may have faded from previous months, and the absence of large-lot projects overseas resulted in the month-on-month dips in November orders,” Sho Fukuhara, equity analyst at Jefferies, said.
“We maintain cautious about the order momentum in upcoming months,” he added.
This week, Japanese manufacturers’ business confidence index rose to a four-month high in December as supply constraints began to ease, according to a poll.
The monthly Reuters Tankan poll, which tracks the Bank of Japan’s closely watched Tankan quarterly survey next due on December 13, showed the manufacturers’ sentiment index improved to 22 in December, following three straight months of declines to 13 in November.
- Reuters with additional editing by George Russell
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