More than 70% of Japanese firms are considering price hikes this fiscal year

Japan inflation indications from a Reuters poll.

• A growing majority of Japanese companies are preparing to raise prices in the face of rising labour and raw material costs

Of the firms polled, 13% said they had already increased prices in the business year that began April 1, while a further 70% said they are considering doing so. The widespread pricing pressure is likely to increase calls for government support to soften the impact on consumers.

Labour shortages and ongoing inflation are also driving wage increases. Nearly 70% of respondents said higher monthly salaries for new recruits were now unavoidable. “Prices are on the rise. The current wage level cannot get us new workers,” said an official at a steelmaker. A manager at a transportation equipment manufacturer added that wage hikes are necessary to attract talent in a country facing a declining birthrate and an ageing population.

Separately, research from Teikoku Databank shows that over 70% of Japanese companies plan to raise starting monthly salaries for new graduates this year, with the average increase coming in at ¥9,114 (about US$64) compared to last year.

Japanese official, including those at the Bank of Japan, will welcome the enws on rising wages and prices.

This article was written by Eamonn Sheridan at www.forexlive.com.