Japan’s wholesale prices rose 4.9% in May, the largest increase since September 2008.
As the rollout of the COVID-19 vaccine in many countries raises expectations for a global economic recovery, the prices of commodities traded between companies have risen for the third straight month.
Wholesale data was obtained when Japan’s core consumer price index, an indicator of inflation, remained near zero during the coronavirus pandemic.
Wholesale prices affect consumer prices, and economists are closely watching whether rising raw material costs are passed on to consumers. Wholesale prices in April rose 3.8%.
Oil and coal products were the main contributors to the May wholesale price surge, which surged 53.5% year-on-year, reflecting recent rises in the crude oil and other commodities markets.
As demand recovered, the price of non-ferrous metals rose 41.6%. The price of scrap has risen by 91.6%.
“The rise in the commodity market, supported by the global economic recovery, is affecting a wide range of commodities and pushing up wholesale prices in Japan,” a Bank of Japan official told reporters.
Data show that electricity, city gas and water tariffs fell 3.9% among those who fell.
The introduction of the COVID-19 vaccine raises expectations for a global economic recovery, but the effects of the pandemic still remain.
Japan lags behind other major economies such as the United States and the United Kingdom in vaccination of its population and is trying to accelerate vaccination for the Tokyo Olympics and Paralympics this summer.
The world’s third-largest economy is expected to shrink further as domestic demand weakens during the April-June quarter.
Import prices in May rose at the fastest pace since August 2008, rising 25.4% year-on-year, while export prices rose 11.0%. Both are yen-based.
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