Oil spurs Japan wholesale prices

After years of stagnation Japan's economy is recovering

Japanese wholesale prices were up 3.4% in August compared with a year ago, following higher raw material and oil costs, official figures have shown.

The rate was the highest for more than 25 years, although it was up only slightly on July's figure and was in line with expectations.

Analysts said the figures suggested that firms were beginning to pass on higher costs to consumers.

The rise also indicated the economy is continuing to shake off deflation.

Economic growth

In July, the Bank of Japan raised interest rates to 0.25%, ending its zero-rate policy which had existed for 6 years.

However, analysts do not think the latest data makes a further rate rise imminent.

"The rate of [wholesale price] increase is little changed, which is the result of a tug-of-war between stabilising commodity prices and recent yen weaknesses," said Soichi Okuda, senior economist with Sumitomo Shoji Research.

The news comes a day after Japan revised upwards its economic growth in the three months to June.

Japanese gross domestic product (GDP) grew at an annualised rate of 1%, compared with a preliminary figure of 0.8%, the Cabinet Office said.