Japanese Wholesale Prices Rise More Than Expected

Japanese wholesale prices grew more than expected in April from a year earlier on a recent pick-up in oil prices, with markets viewing the data as keeping the Bank of Japan on track for a rate increase later this year.

Separate government figures showed that the nation's current account surplus expanded to a record high in March as imports fell and exports continued to grow firmly.

The corporate goods price index (CGPI), which tracks trends in wholesale prices of goods, rose 2.2% in April from a year earlier, the Bank of Japan data said on Monday.

That compared with economists' consensus forecast of a 1.8% rise and exceeded the March increase of 2.0%.

"It was an unexpectedly strong increase, reflecting rises in crude oil and nonferrous metal prices," said Yoshiki Shinke, a senior economist at Dai-ichi Life Research Institute. "Wholesale prices also rose on a month-on-month basis, suggesting that they have bottomed out largely due to a rebound in global commodity prices," he said.

Compared with a month earlier, the CGPI rose 0.8% in April. Financial markets showed little reaction to the data.

The year-on-year pace of rise in wholesale prices accelerated for the second straight month, after slowing for five consecutive months reflecting an easing of commodity prices.

But rises in wholesale prices have hardly been passed on to consumer prices so far as the corporate sector's strength has not filtered through to households.

The data was seen unlikely to change the market view that the BOJ will leave monetary policy unchanged at its two-day policy meeting that kicks off on Wednesday.

The central bank raised the key policy rate by a quarter point to 0.50% in February and has left it unchanged since then.

Separate government data showed on Monday that Japan's current account surplus rose 36.9% in March from the same month a year earlier to a record amount of 3.3172 trillion yen ($27.60 billion).

That was above economists' median forecast of a year-on-year rise of 22.3% to 2.9624 trillion yen, with increases seen both in the trade surplus and income gains from overseas investment.

Japan's economy is in its longest growth cycle of the postwar era, albeit growth is at a much slower pace than in previous booms.

A Reuters poll of 30 economists showed last Friday that the world's second-largest economy probably grew a real 0.7%, or an annualized 2.7% in January-March from the previous quarter thanks to firm private consumption and exports.

January-March GDP data is due out at 8:50 a.m. Tokyo time on Thursday, May 17.