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Japan wholesale prices surged 9.1% in May as weak yen took toll

Rising prices become sensitive issue ahead of upper house election in July

Japan's import prices jumped a record 43.3% from a year earlier, with the weak yen playing a big role.   © Reuters

TOKYO (Kyodo) -- Wholesale price inflation in May accelerated to 9.1% from a year earlier, reflecting higher raw material prices and sharp declines in the yen that boosted import costs at the fastest pace, Bank of Japan data showed Friday.

The prices of goods traded between companies marked the 15th straight month of increase, raising the likelihood of higher consumer prices that could hurt private consumption as the economy has yet to fully recover from its pandemic malaise.

The 9.1% gain in wholesale prices follows a revised 9.8% rise in April, the fastest pace on record.

The BOJ's commitment to maintaining its ultralow rate policy has prompted the yen to fall sharply against the dollar and the euro as the U.S. Federal Reserve and the European Central Bank move toward tighter policy to fight surging inflation.

Import prices jumped a record 43.3% from a year earlier, as a weak yen means higher costs for resource-poor Japan, which relies heavily on energy imports, while export prices rose 16.7%, both in yen terms.

The BOJ believes commodity inflation will not last long but higher costs are a headache for companies facing pressure to secure profits by raising retail prices while not scaring off consumers.

In a country long known for deflation, rising prices have become a sensitive issue ahead of upper house elections in July, as the nation has yet to see robust wage growth that would ease the pain felt by consumers.

BOJ chief Haruhiko Kuroda on Wednesday retracted his remark that consumers had become "tolerant" of rising prices, after a backlash from opposition lawmakers and consumers.

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