The government will raise prices of imported wheat to flour millers by an average of 2 percent in October, the third straight increase since last year, boosting costs for companies such as Nisshin Seifun Group Inc.
Foreign wheat for sale by the government to domestic millers will rise to ¥57,720 a metric ton on average in October from the current level of ¥56,710, the Agriculture, Forestry and Fisheries Ministry said Wednesday in a statement. Japan depends on imports for almost 90 percent of its wheat, making it Asia’s largest buyer after Indonesia.
Wheat futures in Chicago have risen 11 percent in the past year, spurring a rally in global food prices to an all-time high in February.
Bread makers in Japan joined coffee roasters and cooking oil makers in passing on higher commodity costs, eroding consumer purchasing power and potentially slowing an economic recovery.
“Food makers will have difficulty passing on higher grain costs fully to consumers,” said Hidehiko Fujii, chief economist at the Japan Research Institute Ltd. “A rapid rally in the yen is casting a shadow over the economic outlook, delaying improvement in personal incomes and employment.”
Masaaki Kadota, executive director of the Flour Millers Association, estimated that the 2 percent increase will boost grain-purchasing costs for millers by about ¥5 billion on an annualized basis.
The October increase follows an 18 percent jump in milling wheat prices in April. The yen’s appreciation against the dollar since then has curbed costs for Japanese buyers.
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