Japan’s wholesale inflation hits 13-year peak as corporate profits squeeze

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Japan’s wholesale inflation hits 13-year peak as corporate profits squeeze

On Tuesday, data from BoJ (Bank of Japan) had unmasked that the world’s third-largest economy’s wholesale inflation had surged to a whacking 13-year peak in September as a sharp increase in global commodity prices coupled with a much softer Japanese Yen had soared import expenses, eventually squeezing corporate profit margins in a near term outlook while stoking frets of an unprecedented increase in consumer prices.

In point of fact, followed by the release of Tuesday’s BoJ data, several analysts were quoted saying that a rancorous rise in prices of raw materials alongside lingering supply chain constraints led to a sweeping step-up in input expenses, fanning the flames further for manufacturers while clouting near- to medium-term outlook for the world’s third-largest economy that largely relies on exported items to weather a weaker consumer spending over decades.

Japan’s wholesale inflation spikes to 13-year peak

According to data from Bank of Japan, the country’s corporate goods price index (CGPI), a gauge to prices that companies charge to each other for services alongside goods, rose 6.3 per cent last month compared to the same time a year earlier, topping a market estimate of 5.9 per cent, while September’s increase in Japan’s CGPI had marked up the steepest rise in the country’s wholesale inflation on a year-on-year basis since the September of 2008.

Meanwhile, laying off the blames of a steeper-than-anticipated rise in Japan’s wholesale inflation to a staggering increase in raw materials’ prices alongside petroleum and coal products, a senior economist at Daiwa Securities, Toru Suehiro, said, “If rises in raw material costs accelerate, companies selling final goods prices will see profits squeezed.

As Japan is a net importer of fuel, such cost-push inflation could hurt the economy”. As global commodity prices had been heightened up sharply last month, Japan’s petroleum and coal costs grew by 32.4 per cent in September, while timber prices jumped as much as 48.3 per cent.