Tokyo's latest data reveals a continued deceleration in Japan's wholesale inflation for the sixth consecutive month in June. This decline can be attributed to the downward trajectory of fuel and commodity prices, signifying a gradual alleviation of cost-push pressures that previously propelled consumer prices higher.
According to Masato Higashi, head of the Bank of Japan's price statistics division, sectors such as beverage and food manufacturers have been able to offset elevated raw material costs to some extent. However, the rate of this adjustment seems to be moderating, as observed during a recent briefing.
Data demonstrates that the corporate goods price index (CGPI), which measures the prices charged by companies to one another for their goods and services, experienced a 4.1 percent increase in June compared to the previous year. Although this growth falls slightly short of the median market forecast of 4.3 percent, it represents a deceleration from the 5.2 percent gain observed in May. In fact, this was the slowest pace of annual growth since April 2021, as indicated by the Bank of Japan's data.
The primary driver behind this slowdown was the increase in utility and gas bills, which rose by 5.3 percent in June compared to the previous year. This rise was notably smaller than the 12.8 percent gain witnessed in May. Additionally, the data reveals that food and beverage prices rose by 7.4 percent in June, a smaller increase than the 8.0 percent gain recorded in May.
Another significant development is the 11.3 percent decline in yen-based import prices in June compared to the previous year. This represents the largest annual drop since July 2020 and provides some relief for retailers who heavily rely on imports of raw materials.
The Bank of Japan has emphasized its commitment to maintaining an ultra-loose monetary policy until the recent inflationary surge driven by costs transitions into price increases propelled by robust domestic demand, accompanied by higher wages.
