The Ukrainian crisis could hurt the Japanese economy through fuel spikes, the Bank of Japan’s policymakers say

The Tokyo-Ukraine crisis could hurt the Japanese economy by pushing up prices for fuels and commodities by households and businesses, a central bank policymaker said Thursday.

According to Junko Nakagawa, a member of the Bank of Japan’s board of directors, consumer inflation in Japan temporarily hits the central bank’s elusive 2% target, partly due to the sharp rise in energy costs caused by the crisis. May approach.

However, such a rise in inflation alone is not a reason to regain the stimulus, he added, adding that the Japanese economy is still recovering from the pandemic wounds.

It took more time to measure the impact of the Ukrainian war on the Japanese economy. This can be brought about not only by trade, but also by market volatility and rising raw material costs.

“Energy and food prices may rise, but if such a move undermines corporate profits and household income, it may weigh heavily on the Japanese economy,” Nakagawa told the briefing. Told.

“Development needs to be scrutinized [in Ukraine] Nakagawa, the first BOJ policymaker to elaborate on the economic outlook since Russia invaded Ukraine, said:

Soaring raw material costs pushed up wholesale prices in Japan, while core consumer inflation in January remained at 0.2% due to sluggish household spending and wage growth.

However, analysts say core consumer inflation will pick up from next month towards the Bank’s target of 2%, as rising oil costs push up gasoline and electricity prices as resistance from lower mobile phone prices disappears. I expect it.

In a pre-briefing speech, Nakagawa said, “For the time being, inflationary pressures on energy, food and industrial products will remain strong,” and the year-on-year rise in core consumer prices “may rise temporarily.” There is. ” Up to 2 percent. “

“Even if that happens, it’s important to scrutinize the factors. [driving up prices] And whether Japan’s economic fundamentals are strong enough to make such price increases sustainable, “she said.

This statement raises the possibility that the Bank of Japan will upgrade its inflation forecast in its April forecast quarterly review. Current forecasts are for core consumer inflation to reach 1.1% in the fiscal year beginning in April.

Japan’s reliance on fuel and food imports makes the economy vulnerable to rising commodity prices and adds to the pain for policy makers worried about the impact of a pandemic on growth.

Given Japan’s low inflation and fragile recovery, Bank of Japan Governor Haruhiko Kuroda has reiterated that banks are not willing to follow in the footsteps of the Federal Reserve as they tighten their policies.

Reika Kihara