Wholesale prices in Japan rose 5.8 percent in April from a year ago on higher energy and food prices but the pace of the increase continued to slow, with import costs falling for the first time in over two years, the Bank of Japan said Monday.

The increase in the corporate goods price index, which measures the prices of goods traded between companies, was the smallest since August 2021. It marked the 26th straight month of year-on-year growth, boosting the likelihood that consumer prices, which track producer prices with a lag, will remain elevated.

Photo taken in June 2019 shows the Bank of Japan headquarters in Tokyo. (Kyodo)

Government efforts to bring down fuel costs took some pressure off the index. Without government subsidies, wholesale prices would have gained 6.5 percent, according to the BOJ.

In yen terms, import prices dropped 2.9 percent amid the waning impact of the currency's weakness, down for the first time since February 2021, while export prices climbed 1.8 percent.

Japanese companies have been passing on higher energy and other raw material costs to consumers. The yen's sharp depreciation last year has also inflated import costs to the detriment of resource-scarce Japan.

But the BOJ is in no hurry to tighten its monetary policy as consumer inflation, which remains above its 2 percent target, is expected to start slowing down later this year and the bank hopes to ensure wages continue to rise.

Among major gainers, electricity, city gas and water bills jumped 25.8 percent from a year earlier while iron and steel prices rose 10.9 percent. Food prices gained 7.0 percent.

But petroleum and coal product prices dropped 6.6 percent after their sharp gains lifted the overall wholesale price index in recent months. Prices of lumber and wood products plunged 17.9 percent.

"We will continue to closely monitor developments in commodity and import prices affected by foreign exchange rates and how higher costs will be reflected (in consumer products)," a BOJ official said.