© Reuters. FILE PHOTO: People wait for change of traffic sign in front of a shop at Ginza shopping district in Tokyo, Japan, May 28, 2022. REUTERS/Kim Kyung-Hoon/File Photo
TOKYO (Reuters) – A wider range of Japanese companies are raising prices, including those in sectors historically reluctant to pass on higher costs to customers, a Bank of Japan research note said on Wednesday in a nod to broadening inflationary pressure.
A thorough analysis of the BOJ’s “tankan” quarterly business survey showed price increases were spreading to many industries, including electronic goods retailers and drug stores, which are known for luring customers with big discounts, the note said.
Some companies that raised prices did so for the first time in 30 years after a sharp rise in raw material costs, the research note said.
“Hearings conducted on companies showed that when a firm with a big market share in the industry raises prices, others tended to follow suit,” the research note said.
The BOJ’s occasional research notes, produced by its staff, do not represent the central bank’s official view but tend to shed light on topics that are deemed important for monetary policy decisions.
Japan has been mired in decades of deflation and low inflation as many companies avoided raising prices for fear of scaring away cost-sensitive consumers.
That is starting to change as Russia’s invasion of Ukraine and supply constraints caused by the COVID-19 pandemic sharply push up fuel and raw material prices, forcing companies to pass on higher costs to households.
Japan’s annual core consumer inflation hit a 40-year high of 3.6% in October, well above the BOJ’s 2% inflation target, in a sign of the pain soaring import costs were inflicting on households.
BOJ Governor Haruhiko Kuroda has said the bank will maintain ultra-loose policy until inflation is driven not just by such cost pressures, but strong demand and higher wage growth.