Japan’s annual producer price index surged 9.20% in June, surpassing the average market estimate of 8.80%. The upturn mainly benefitted from mounting import prices due to a weakening yen. Eventually, the currency’s sharp slump weighed on a fragile economic recovery.
Meanwhile, the figure slightly eased from the upwardly revised 9.30% a month earlier. The slowdown mirrored a moderation in global commodity prices. In addition, it also indicated the impact of government subsidies on gasoline costs.
Nevertheless, it still marked the sixteenth consecutive month of increase, mainly pushed higher by rising energy and raw material prices.
Accordingly, the latest data highlights Japan’s Prime Minister Fumio Kishida’s challenge in cushioning the economic blow from higher living costs. The problem emerges as a policy priority after his victory in Sunday’s upper house election.
The yen-based imported goods prices skyrocketed 46.30% last month from a year earlier, citing the fastest gain on record. Then, Japan’s heavy reliance on fuel imports may prevent wholesale inflation from slowing extensively.
Analysts explained that rising fuel prices push up electricity and gas bills with a lag of several months. Meanwhile, the Bank of Japan stated that companies also tend to change price tags at the start of each quarter. In line with this, wholesale prices for goods such as food may perk up around the said period.
US, Japan to cite currency impact of Ukraine war
The United States and Japan agreed on Tuesday to work together to address the weighing impact of the Ukraine crisis. The move will discuss the rising food and energy prices, as well as volatility in currency markets.
In line with this, US and Japan pledged to cooperate as appropriate on currency issues. This partnership will also align with their commitments as part of the Group of Seven and Group of 20 economies.