April Corporate Prices in Japan Surge 10%... "First Double-Digit Increase in 41 Years"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The corporate goods price index for April this year, which reflects the business sentiment of Japanese companies, rose by 10% compared to the same month last year, marking the first double-digit increase in 41 years since December 1980, when the second oil shock occurred.

According to Japan's NHK and others, the Bank of Japan (BOJ) announced that the corporate goods price index for April (2015 average 100, preliminary figure) was 113.5, up 10.0% year-on-year. This is the highest level since statistics began in 1960 and marks the 14th consecutive month of increase. It significantly exceeded market expectations of 9.4%.

The corporate goods price index indicates price trends of goods traded between companies. NHK and others reported that the rise in this price index was largely due to the impact of Russia's invasion of Ukraine, which caused prices of resource-related products such as oil and coal to surge, leading to a chain reaction of price increases across various items.

By item, coal and petroleum products rose 30.9% year-on-year, followed by steel at 29.9%, non-ferrous metals at 25.0%, chemical products at 10.2%, metal products at 7.4%, and plastic products at 6.2%, showing price increases across a wide range of items. As lumber prices also rose, prices for lumber and wood products increased by 56.4%, and consumer goods such as food and beverages (3.7%) and textile products (2.8%) were also affected by price increases.

NHK stated, "More than 70% of the 744 items surveyed showed price increases, and companies are passing on the rise in raw material costs to prices during transactions."

In addition to rising energy prices, the sharp depreciation of the yen was also analyzed as a factor pushing up prices within Japan. The import price increase rate based on the yen was 44.6%, significantly higher than the 29.7% based on contract currencies such as the dollar.