Bank of Japan sees broadening inflationary pressure

The Bank of Japan reported on Thursday that inflationary pressures are expanding, driven by soaring raw material costs. The central bank expressed worry over this growing inflation trend. In a statement following a quarterly meeting of its regional branch managers, the BOJ highlighted that some firms are increasing prices more frequently than usual due to these cost hikes.

Firms across various regions are passing on a broad spectrum of rising costs, including higher raw material costs stemming from the Middle East conflict, a weak yen, and increasing labor expenses. The BOJ upgraded its economic outlook for two of the nine regions it covers and maintained its view for the remaining areas, indicating a moderate recovery across the board.

The central bank noted that these efforts to pass-through the rising costs are extending to businesses closer to consumers, resulting in an increasing number of companies raising prices. Despite the volatility in input costs, this trend of more frequent price hikes is becoming more common.