Japan's economy minister sees limited cost pass-through to consumer prices

TOKYO, Aug 4 (Reuters) - Japan's Economy Minister Minoru Kiuchi stated on Tuesday that the pass-through of rising costs, influenced by the Middle East conflict, to consumer goods prices has remained limited thus far. He noted that the overall consumer price index saw a moderate year-on-year increase of 1.7% in June.

Kiuchi acknowledged the Bank of Japan's recent warning about rising risks of an inflation overshoot, but offered a sanguine view on current inflationary pressures. He did, however, express the need for vigilance regarding the possibility that costs could be gradually passed on to food and other consumer goods from summer through autumn.

Separately, a follow-up survey on the Price Negotiation Promotion Month indicated an increase in the overall price pass-through rate to 54.2%. However, the rate in public procurement declined to 48.4%, a development described as regrettable. Feedback from small and medium-sized enterprises suggested that requests for negotiations were refused or cost pass-through attempts were declined due to budget constraints, pointing to potentially inadequate awareness and responses among local governments.

A Cabinet Office white paper for fiscal 2026 also highlighted that rising prices and an improved ability to pass on costs are contributing to an increase in business capital investment in Japan.