The Rising Wholesale Prices in Japan

The Rising Wholesale Prices in Japan

The wholesale prices in Japan are expected to have accelerated in June, primarily due to a combination of factors such as a weak yen, increased commodity import bills, and rising transportation costs. These elements are contributing to cost-push inflation pressures on the economy, which heavily relies on international trade.

According to a poll of 17 economists, Japan's corporate goods price index (CGPI), which measures the prices that companies charge each other, is anticipated to have risen 2.9% in June compared to the previous year. This marks an acceleration from the 2.4% growth observed in the prior month. The inflation data in Japan is closely monitored by the central bank, especially after recent monetary policy adjustments.

The upcoming data on core machinery orders is expected to show a rebound in May from the previous month. This increase in machinery orders, which are a leading indicator of capital expenditure, is encouraging news for policymakers concerned about the outlook for investment in the country. The recovery in machinery orders indicates a boost in capital spending in the near future.

The weakening yen, along with fluctuations in crude oil and commodity prices, has contributed to upward pressure on import prices. This, in turn, affects various industries including energy and materials-related products. Additionally, disruptions in logistics caused by external crises and domestic regulations on working hours for truck drivers are further driving up transportation costs, impacting overall pricing dynamics.

The Bank of Japan is scheduled to release the CGPI data on July 10, shedding light on the extent of inflationary pressures in the economy. Additionally, the machinery orders data, which offers insights into future capital expenditure trends, is set to be disclosed on July 11. Furthermore, the Ministry of will release current account data on July 8, providing information on the country's financial surplus in May.

The rise in wholesale prices in Japan reflects a complex interplay of global and domestic factors influencing the country's inflation dynamics. The data on price indices and machinery orders will offer valuable insights into the economic conditions and potential trends in capital expenditure, guiding policymakers in their decision-making processes.

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