Japan Higher Electricity Rates Force Wholesale Prices 4.4% Higher

Japan’s wholesale prices rose 4.4 percent in May from a year earlier, affected by higher electricity rates as well as increasing costs for petroleum and coal products, the Bank of Japan said Wednesday.

The index of corporate goods prices grew for the 14th straight month to 106.1, against the 2010 base of 100, amid the effects of the consumption tax hike from April, the central bank said in a preliminary report. The pace of growth compared with an upwardly revised 4.2 percent increase in April.

After eliminating the impact from the sales tax hike, the index still grew 1.6 percent to 103.2, with the BOJ saying there is solid demand for corporate goods such as steel and wood for construction use.

Producer prices for electricity, gas and water grew 14.1 percent with the tax hike factored in. It also reflected raised electricity rates as a result of higher fuel costs and more spending on developing renewable energy, the BOJ said.

Iron and steel products saw a 6.9 percent increase in their prices while petroleum and coal products marked an 11.9 percent gain.

On a month-on-month basis, the price index grew 0.3 percent from April. Excluding the sales tax impact, it rose 0.2 percent.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza