By Tetsushi Kajimoto
A recent Multibagger poll indicates that Japan's wholesale prices are expected to have accelerated in June, driven by a combination of factors such as a weak yen, higher commodity import bills, and increasing transportation costs. This surge in prices is putting pressure on the trade-reliant economy, leading to cost-push inflation.
Additionally, the poll suggests that core machinery orders likely rebounded in May, offering relief to policymakers concerned about the outlook for capital expenditure. The corporate goods price index (CGPI) is expected to have risen by 2.9% in June from a year earlier, showing an acceleration compared to the previous month.
The Bank of Japan, which raised interest rates for the first time in over a decade in March, will closely scrutinize the inflation data. The central bank recently took steps to reduce government debt buying as part of its monetary policy normalization process.
According to Takeshi Minami, chief economist at Norinchukin Research Institute, the weakening yen and rebounding commodity prices are contributing to the upward pressure on import prices. This trend is likely to affect energy and materials-related industrial products.
Moreover, restrictions on logistics due to the Middle East crisis and domestic regulations on working hours for truck drivers are driving up transportation costs, further adding to the inflationary pressures.
The upcoming data releases include the CGPI data on July 10 and the machinery orders data on July 11, which are crucial indicators for capital spending trends in the coming months.
Furthermore, the Ministry of Finance will release current account data on July 8, expected to show a surplus of 2.4539 trillion yen in May.
Overall, these developments in wholesale prices, machinery orders, and current account surplus can provide valuable insights for investors and individuals looking to understand the economic landscape in Japan. It is essential to stay informed about these trends to make informed decisions about investments and financial planning.