Japan's wholesale inflation hit a four-decade high in October, following a similar spike in China's factory gate prices as supply bottlenecks and rising commodity costs threatened Asian corporate profits.
The rising cost pressures, coupled with a weak yen that inflates the price of imported goods, adds to pain for the world's third-largest economy as it emerges from the consumer slump caused by the pandemic.
"Rising costs are certainly negative for corporate profits," said Atsushi Takeda, chief economist at Itochu Economic Research Institute. "If the economy continues to recover, firms may be able to pass on costs (to consumers) at some point," he said.