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Higher power rates, weaker yen, push up wholesale prices 2.2%

Kyodo

Wholesale prices rose 2.2 percent in July from a year earlier for the fourth straight monthly increase, reflecting higher electricity prices and the effects of the yen’s depreciation, the Bank of Japan said Monday.

The index of corporate goods prices stood at 102.1 against the 2010 base of 100, the central bank said in a preliminary report.

The rise, which followed a 1.2 percent gain in June, largely stemmed from seasonal hikes in electricity prices, with prices of electric power, gas and water surging 9.5 percent from a year earlier.

The year-to-year increase in July was the largest since August 2011, according to the BOJ.

The increase in wholesale prices also reflected moves by companies to pass on rising import prices of materials due to the yen’s depreciation against other major currencies.

By product, prices of petroleum and coal products soared 16.8 percent due to higher crude oil prices amid political uncertainty in the Middle East as well as growing demand during the summer season, a BOJ official said.

Prices of lumber and wood products increased 12.2 percent, led by materials used for housing on the back of a pickup in housing investment.

“Increasing electricity and gas prices and moves to pass on the yen’s depreciation and rising material prices to product prices are likely to continue for a while,” the official said.

As the economy has started to recover gradually, price hikes are likely to further spread if the balance of supply and demand improves, the official said.

Meanwhile, prices of information and communication equipment dropped 4.1 percent amid intense price competition, while steel prices fell 1.7 percent.

On a month-on-month basis, the index was up 0.5 percent from June.

In terms of the yen, Japanese export prices surged 14.3 percent from a year earlier, while import prices soared 18.5 percent due to the weakening yen.

On a contract currency basis, export prices dropped 1.5 percent and import prices fell 0.4 percent.