Wholesale prices in Japan jumped a record 9.7 percent in 2022 from a year ago after December became another month of double-digit growth, as higher import costs kept up inflationary pressures and squeezed corporate profits, the Bank of Japan said Monday.
The annual gain in wholesale prices was the biggest since comparable data became available in 1981 and twice as fast as in 2021 when a 4.6 percent increase was reported. In December alone, the price of goods traded between companies surged 10.2 percent, topping 10 percent for the second time in 2022 and marking the second-largest gain on record.
Japan saw the corporate goods price index rise year over year for the 22nd straight month, prompting companies to pass on higher costs to consumers to remain profitable.
The country's consumer prices, which are affected by wholesale prices, have also been climbing, albeit at a much slower pace, and have remained above the BOJ's 2 percent target.
The yen's sharp depreciation against the U.S. dollar has added to the woes of resource-scarce Japan by inflating the cost of energy imports as well as those of raw materials and food items. Import prices gained 39.1 percent over the year in 2022, while export prices rose 16.2 percent in yen terms.
The BOJ has said that such cost-push inflation is transitory and ultralow rates should be maintained to achieve its 2 percent inflation target stably and sustainably.
But rising prices of everyday goods have been hurting consumer sentiment and financial markets have piled pressure on the BOJ to tweak its policy at a time when major central banks have been fighting soaring inflation by raising interest rates.
The BOJ surprised markets in December by widening the trading band for benchmark 10-year government bond yields, even as its governor denied it was effectively a rate hike or part of monetary tightening.
The 10.2 percent gain in December wholesale prices was the steepest since 10.3 percent in September when Japanese authorities intervened in the foreign exchange market to stem the yen's rapid depreciation.
Import prices climbed 22.8 percent in December, compared with a 12.1 percent increase for export prices.
Japanese companies have been reluctant to raise retail prices and instead have chosen to absorb rising costs for fear of scaring away consumers. The passing on of higher costs has become more evident, though, with price hikes across a wider range of items.
Among major items that reported sharp price increases, iron and steel products jumped 20.9 percent and pulp and paper rose 13.3 percent.
Petroleum and coal products increased 8.0 percent and food prices were up 7.7 percent.
The government is scheduled to release consumer prices data for December on Friday, after the BOJ holds a two-day policy meeting starting Tuesday.
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