Japan's wholesale prices keep falling, pace moderates on global recovery hopes

TOKYO: Japan's wholesale prices fell 2.0% in December from a year earlier on sliding fuel costs, data showed on Thursday, a sign that the hit to demand from the coronavirus pandemic is weighing on the world's third-largest economy.

The pace of decline was smaller than the previous month's 2.3% fall, however, as a rebound in global demand and hopes over the rollout of vaccines pushed up the prices of some commodities.

The fall in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, was smaller than a median market forecast for a 2.2% decline, data by the Bank of Japan showed.

The data highlights the chance wholesale prices will narrow their margin of declines in coming months, if expectations of a global recovery continues to push up crude oil and other commodities prices.

Prices of some chemical and electronic goods ticked up in December on firm demand for automobile parts, a sign strong demand for manufactured goods worldwide was underpinning inflation, the data showed.

Japanese carmakers including Toyota Motor Corp and Honda were forcd to halt output at their overseas factories due to a shortage of semiconductors, as the pandemic disrupted supply chains.

But the hit to the economy from the coronavirus pandemic will keep any recovery in overall prices modest, analysts say.

"Given a recent resurgence of infections, the coronavirus pandemic will continue to weigh on wholesale prices," a BOJ official told a briefing.