1 week Ago By Reuters
TOKYO: Japan's annual wholesale inflation hit 4.2 per cent in March, accelerating from the previous month in a sign of persistent cost pressures that add to corporate pain from uncertainty over US tariff policy.The data highlights the challenge the Bank of Japan faces in judging the timing of its next interest rate hike, particularly given push-pull forces exerted by mounting domestic inflationary pressure and the expected hit to economic growth from President Donald Trump's tariffs.
The rise in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, exceeded a median market forecast for a 3.9 per cent increase and followed a 4.1 per cent gain in February.
Prices rose for a broad range of goods, including a 3.1 per cent year-on-year gain in the cost of food and a 8.6 per cent jump in petroleum and coal prices, central bank data showed on Thursday.
The yen-based import price index, however, fell 2.2 per cent in March from a year earlier after a 0.9 per cent drop in February.
"Wholesale inflation is likely to slow ahead due to falling commodity costs and the yen's rebound," which will help moderate consumer inflation, said Masato Koike, senior economist at Sompo Institute Plus.Stubbornly high food costs and rising wages have kept consumer inflation above the BOJ's 2 per cent target for nearly three years, underpinning market expectations the central bank will continue raising interest rates from the current 0.5 per cent.
But Trump's decision to impose sweeping tariffs on goods imports has complicated the BOJ's rate-hike path by threatening to derail a moderate recovery in Japan's export-heavy economy.BOJ Governor Kazuo Ueda said on Wednesday the central bank must scrutinise "without preconception" whether the economy is on track to meet its projection, suggesting the chance of a pause in interest rate hikes as US tariffs jolt markets.© New Straits Times Press (M) Bhd.
