Energy crisis could push prices up in Japan

The Bank of Japan has warned that rising oil prices and supply disruptions caused by the Middle East conflict could negatively impact the country’s economy, limiting its ability to raise interest rates.

In a quarterly report based on regional branch data, the central bank noted that companies are already under pressure from rising costs and raw material shortages, Caliber.Az reports, citing Reuters.

“As ​uncertainty heightens, some firms worried that rising prices mainly for energy could hurt corporate profit and consumption,” the report states.

At the same time, the Bank of Japan maintained a positive assessment of economic conditions across all nine regions, highlighting resilient consumer spending driven by tourism and rising wages.

Most companies plan to increase salaries this year at levels similar to last year, though plans could change depending on developments in Iran.

The report reflects the consequences of the February 28 US and Israeli strikes on Iran, including higher oil prices and a weaker yen, creating inflationary pressures.

Rising fuel costs may slow the wage-price growth cycle that the Bank of Japan views as a condition for tightening monetary policy further.

Companies are also considering raising prices in response to higher oil costs and a depreciating yen.

By Bakhtiyar Abbasov