Japan central bank sees moderate impact from global commodity inflation
Rising global commodity prices are likely to push up Japan’s consumer inflation, though only for a temporary period, and to a smaller extent than in Western economies, the Bank of Japan said on Monday.
As the inflation is driven by robust overseas demand, Japan’s corporate profits will see the hit from higher import costs more than offset by the benefits of solid exports, the central bank said.
“The underlying increase in commodity prices will worsen Japan’s terms of trade for the time being,” the BOJ said in a report. “But that will be outweighed by positives, such as rising exports and capital expenditure.”
Japan’s wholesale prices rose 5.1% in May from a year earlier, their fastest pace since 2008, fuelled by rising commodity costs.
But core consumer prices, the BOJ’s preferred measure of inflation, rose just 0.1% in May as weak domestic demand kept firms from passing on the higher costs.
That is much weaker than a May spike of 3.4% in the U.S. Federal Reserve’s preferred inflation gauge, the core personal consumption expenditures price index.
Reference: Reuters
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