World News

Japan’s wholesale prices mark first fall in five months as pandemic hits global demand

By Leika Kihara

TOKYO (Reuters) – Japan’s wholesale prices marked the first annual decline in five months in March, suggesting that slumping global demand for oil and raw material due to the coronavirus pandemic will weigh on inflation in coming months.

The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, fell 0.4% in March from a year earlier, Bank of Japan (BOJ) data showed on Friday.

The drop was bigger than a median market forecast for a 0.1% decline and followed a 0.8% rise in February. It was the first year-on-year fall since last October, when prices fell 0.3%.

Prices of oil and coal prices fell 10.3% in March from a year earlier, while those of non-ferrous metal goods were down 7.6%, the data showed.

Wholesale prices, considered a leading indicator for consumer inflation, have been under pressure from slumping oil and metal costs as the pandemic paralyses global economic activity.

The data heightens the chance the BOJ will cut its consumer inflation forecasts when it conducts a quarterly review of its projections at its April 27-28 policy meeting.

Under its current forecasts made in January, the BOJ expects core consumer inflation to hit 1.0% in the fiscal year that began in April, remaining distant from its 2% target.

Sources have told Reuters the BOJ is likely to make a rare projection this month that the world’s third-largest economy will shrink this year as the pandemic threatens to push the country deep into recession.

(Reporting by Leika Kihara; Editing by Christopher Cushing)