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- Japan central bank sees moderate impact from global commodity inflation
Japan central bank sees moderate impact from global commodity inflation
Reuters reports that the Bank of Japan said that rising global commodity prices are likely to push up Japan's consumer inflation, though only for a temporary period, and to a smaller extent than in Western economies.
As the inflation is driven by robust overseas demand, Japan's corporate profits will see the hit from higher import costs more than offset by the benefits of solid exports, the central bank said.
"The underlying increase in commodity prices will worsen Japan's terms of trade for the time being," the BOJ said in a report. "But that will be outweighed by positives, such as rising exports and capital expenditure."
Even when demand is strong, Japanese firms tend to be slower to pass on costs than Western counterparts, which will keep any rise in consumer inflation moderate, the BOJ said.
"Looking at past experiences, any rise in consumer inflation driven solely by raw material costs will not broaden, and end up being transitory," it said.
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