MNI BRIEF: BOJ Sees More Firms Hiking Prices

The Bank of Japan assessed that more firms could pass on rising costs and consumer prices will increase in the near-term, the full text of the BOJ’s Outlook Report released on Monday showed.

“When input prices rise, there seems to be a relationship in which the number of firms passing on cost increases goes up in a nonlinear fashion as more competitors raise their selling prices,” it said.

“Such a relationship has also been seen recently, and this suggests that the fact that many competitors have begun to raise prices has driven firms to lean more toward passing on higher input prices to selling prices,” the BOJ said.

The Bank said moves to reflect rising costs in selling prices have "intensified" and "become widespread recently."

Despite resurgent inflation pressures, the BOJ maintained its policy rates and easing guidance after last week's board meeting. (See MNI BOJ WATCH: Closer To 2% Target, But Easy Policy Remains)

The Bank said recent developments in the CPI show that the year-on-year rates of increase have accelerated for both goods and services. “In addition, the trimmed mean of the rate of change in the CPI and the diffusion index (DI) for the share of price-increasing items minus the share of price-decreasing items have risen to their highest levels since the first half of the 1990s,” it added.