Japan’s Wholesale Inflation Accelerates to 3-Year Peak as Energy Costs Rise

Japan’s wholesale inflation accelerated in May to its fastest pace in more than three years as higher energy costs rippled through the economy.

The Bank of Japan (BOJ) data released on June 10 show that the measure of prices companies charge one another for goods and services rose 6.3 percent in May from a year earlier.

The figure was up from a revised 5.3 percent increase in April.

The increase marked the fastest annual rise since March 2023 and reflected broad-based price gains across energy, chemicals, metals, and industrial materials.

The report comes as markets assess the economic effects of rising energy prices linked to tensions in the Middle East, a region that supplies a large share of the world’s oil exports.

Japan imports most of its energy resources, making the country particularly sensitive to swings in global fuel prices.

According to Japan’s Agency for Natural Resources and Energy, the country imports “almost all” of its fossil fuels from overseas and relies on the Middle East for more than 90 percent of its crude oil imports.

The agency said Japan had crude oil stockpiles sufficient to cover roughly eight months of demand as of February.

It also said electricity and gas utilities held just under 4 million tons of liquefied natural gas (LNG) inventories as of March 1, equivalent to about one year’s worth of LNG imports transported through the Strait of Hormuz.

Japanese authorities said they would seek additional supplies from other exporting countries and increase spot-market purchases if energy shipments from the Middle East were disrupted.

A survey released by Tokyo Shoko Research on June 10 found that concerns about the conflict in the Middle East are weighing on Japanese businesses.

Conducted between June and 8, the survey found that 80.6 percent of responding companies reported a negative impact from the situation in the Middle East, up from 78.7 percent in a similar survey conducted in April.

Tokyo Shoko Research said rising prices and supply concerns for crude oil, naphtha, and other key industrial inputs appeared to be increasing pressure on business operations.

Energy Prices, Interest Rates

The BOJ said petroleum and coal products, electricity and gas, chemicals, and nonferrous metals made the largest contributions to the monthly increase.

The bank’s report cited higher prices for gasoline, diesel fuel, lubricating oil, electricity, gas supply, polyethylene resins, copper, and aluminum products. Producer prices for petroleum and coal products rose 13.8 percent in May, from a year earlier, while prices for chemicals increased 13.4 percent.

Import prices also surged. Prices for petroleum, coal, and natural gas imports rose 47 percent from a year earlier and 8 percent from the previous month.

The report identified crude oil, liquefied natural gas, and naphtha among the largest contributors to the increase in import prices.

The inflation data arrive days before the Bank of Japan’s next monetary policy meeting, scheduled for June 15 and 16. The BOJ raised its benchmark short-term interest rate to 0.75 percent in December 2025 and has indicated it will continue monitoring inflation and wage growth.

On April 28, the bank said it would leave its short-term policy rate unchanged at 0.75 percent while assessing economic conditions.