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Japan wholesale prices jumped 8.6% in January amid high material costs

Weaker yen inflated import costs, helping lift prices for 11th straight month

An Idemitsu Kosan oil installation on Tokyo Bay in Ichihara, Chiba Prefecture. Prices of petroleum and coal products rose 34.3% in December from a year earlier, reflecting higher crude oil prices. (Kyodo via Reuters)

TOKYO (Kyodo) -- Wholesale prices in Japan gained 8.6% in January from a year earlier as higher energy and raw material costs continued to add upward pressure, Bank of Japan data showed Thursday.

The pace of year-on-year increase slowed slightly from a revised 8.7% in December, the second-highest gain on record. Wholesale prices rose for the 11th straight month, also due in part to the weakening of the Japanese yen that has inflated import costs for energy-scarce Japan.

Import prices soared 37.5%, compared with a 12.5% gain in export prices, both in yen terms, the BOJ data showed.

Economists and BOJ policymakers are keeping tabs on how the recent uptrend in wholesale prices will affect consumer prices, as core consumer inflation has also been rising in recent months, though the Japanese central bank's 2% inflation target is still far off.

A growing number of Japanese firms have been passing on higher raw material costs, which would eat into their profitability, to consumers by raising retail prices. But higher consumer prices risk hurting demand at a time when the country's economic recovery from the COVID-19 fallout remains fragile, economists say.

Prices of petroleum and coal products rose 34.3% from a year earlier, reflecting higher crude oil prices.

Among raw materials, the price of lumber and wood products surged 58.5%, slowing from 60.6% in December but staying at a high level. Iron and steel prices were up 25.1% and nonferrous metal gained 26.5%.

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