Since 1975
  • facebook
  • twitter
  • instagram
  • Home
  • Japan’s service prices rise for 7th straight month on freight cost gains

Japan’s service prices rise for 7th straight month on freight cost gains

There is uncertainty, however, on whether firms will pass on higher costs to households as demand is yet to show signs of a pick up since emergency COVID-19 curbs were lifted on Sept. 30. (Shutterstock)
There is uncertainty, however, on whether firms will pass on higher costs to households as demand is yet to show signs of a pick up since emergency COVID-19 curbs were lifted on Sept. 30. (Shutterstock)
Short Url:
26 Oct 2021 04:10:57 GMT9
26 Oct 2021 04:10:57 GMT9

TOKYO: The prices that Japanese companies charge each other for services rose 0.9 percent in September from a year earlier to mark a seventh straight month of gains, a sign inflationary pressure is building mostly on global supply constraints.

There is uncertainty, however, on whether firms will pass on higher costs to households as demand is yet to show signs of a pick up since emergency COVID-19 curbs were lifted on Sept. 30.

The increase in the services producer price index was just below a 1.0 percent gain marked in August, Bank of Japan (BOJ) data showed on Tuesday.

The key driver behind the September rise was transportation fees, suggesting that surging global demand and supply bottlenecks are hurting corporate profits.

The cost of ocean freight transportation spiked 34.9 percent in September from a year earlier, the biggest rise since 2008.

Air freight fees were also up 28.5 percent in September, faster than a 19.6 percent gain in August.

“The impact of higher oil costs comes with a lag so if oil prices continue to rise, we might see further hikes in freight transportation fees,” Shigeru Shimizu, head of the BOJ’s price statistics division, told a briefing.

Hotel fees, by contrast, fell 8.4 percent on sliding demand after the end of the Tokyo Olympic Games. The rise in advertisement fees also slowed to 7.2 percent in September from 9.7 percent in August, in a sign of sluggish domestic demand.

Japan has not been immune to global commodity inflation, with wholesale prices surging to a 13-year high of 6.3 percent in September, putting pressure on corporate profit margins and raising the risk of unwanted consumer price hikes but consumer inflation has been stuck around zero as firms remain reluctant to pass on costs to households, reinforcing expectations the BOJ’s 2 percent target will remain elusive. 

Reuters

topics
Most Popular
Recommended

return to top