Sharp inflation caused by surging crude oil and raw-material prices and its impediment to economic recovery

「During the interim accounting period, Japan's economy remained on a moderate recovery track against the backdrop of improving employment and income conditions, although crude oil and material prices rose as tensions escalated in the Middle East and price increases for daily necessities continued amid persistently high prices.」

「中東情勢の緊迫化に伴う原油・資材価格の上昇や持続的な物価高による生活必需品の値上げが続きました。」

「Looking ahead, while consumers are expected to remain inclined to economize due to high prices, the unstable international situation, including growing tensions in the Middle East, is expected to lead to soaring energy prices, higher costs due to the weaker yen and elevated prices. Japan's economic outlook is therefore expected to remain uncertain.」

「Further food price increases, mainly from September onward, heightened consumers' reluctance to purchase, affecting every area related to housing and daily life. Although some divisions, including agricultural materials and agricultural machinery, remained firm, most other divisions fell substantially below the previous fiscal year, resulting in a difficult overall outcome.」

「In addition, the situations in Ukraine and the Middle East are expected to affect Japan's economy going forward.」

「During the cumulative first-quarter period, Japan's economy remained resilient, supported by strong inbound demand and solid corporate earnings. However, the economic outlook remains uncertain due to broad-based price increases and the impact of geopolitical risks arising from the situations in Ukraine and the Middle East.」

「Real incomes remained sluggish and a full-fledged recovery in consumption was not achieved as crude oil prices remained elevated due to the weaker yen and overseas conditions, while prices rose across a broad range of areas, including food and daily necessities. Looking ahead, further price increases are expected due to factors including heightened geopolitical risks arising from unstable overseas conditions, persistently high crude oil prices resulting from the weaker yen, and higher logistics costs caused by the so-called 2024 logistics problem. The resulting deterioration in real incomes is expected to depress consumption and cause the economy to contract.」

「Looking ahead, concerns remain that consumption will stagnate and the economy will deteriorate as real income declines due to increased geopolitical risks in Ukraine and the Middle East, prolonged high crude oil prices resulting from yen depreciation, and continued inflation, particularly for daily necessities and food.」

「Looking ahead, concern remains that continued price increases resulting from higher energy costs and the weaker yen will cause consumer sentiment, which is recovering, to decline again, while prolonged geopolitical risks, including the situation in Ukraine, will contribute to a deterioration in economic conditions.」

「Looking ahead, there are concerns that, due to the external environment, including the situation in Ukraine and the yen's depreciation, continued high crude oil and materials prices will lead to lower corporate earnings and weaker consumer sentiment as a result of higher prices, thereby worsening economic conditions.」

「Meanwhile, Japan's economic outlook remains uncertain due to factors including the prolonged geopolitical risks surrounding the situation in Ukraine, soaring crude oil and material prices, and the continuing depreciation of the yen. Personal consumption showed signs of recovery, particularly in services, as the easing of restrictions on activities restored the flow of people. However, soaring energy prices and price increases across a broad range of areas, including daily necessities and food, put a damper on consumer sentiment, which had begun to recover.」

「Looking ahead, the prolonged Russia-Ukraine conflict is expected to keep crude oil and material prices elevated. The resulting further price increases may depress real incomes, leading to sluggish consumption and a deterioration in economic conditions.」

「Looking ahead, there are concerns that an unstable international situation and sharp fluctuations in foreign exchange rates will accelerate the rise in crude oil and materials prices, leading to further increases in food and daily necessities prices, weaker consumer sentiment, and deterioration in economic conditions and the consumption environment.」

「Looking ahead, the outlook is expected to be heavily influenced by external conditions, including the situation in Ukraine. These conditions may accelerate the rise in crude oil and material prices, deteriorate corporate earnings, and, together with higher food and daily necessities prices resulting from the weaker yen, reduce consumer sentiment and worsen economic conditions.」

「Japan's economic outlook is a matter of concern amid broad-based price increases caused by soaring crude oil and other resource prices, the situation in Ukraine and the weaker yen.」

「Going forward, there are concerns that rapid inflation caused by soaring crude oil and other raw material prices, together with delays in improving employment and income conditions, will impede the economic recovery.」