Japan pump price hits record high of 190.8 yen

The pace of increase matched the largest single-week rise on record, reflecting a spike in wholesale prices after crude oil prices climbed in the wake of Iran's de facto closure of the Strait of Hormuz, a key oil shipping route, amid escalating regional tensions.

With hikes in retail prices expected to affect households, particularly in rural areas where cars are essential for transportation, the Japanese government plans to resume subsidies to oil wholesalers on Thursday, after ending them at the end of last year.

Retail prices rose for the fifth consecutive week, with all 47 prefectures of the country logging increases. The highest price was 198.5 yen in Yamagata, northeastern Japan, while Okayama in western Japan logged the largest weekly rise, at 32.1 yen.

Initially, the ministry had forecast that retail prices would remain below 180 yen this week, believing that a spike in wholesale prices would be reflected in retail prices in stages.

A ministry official said that "inventories at gas stations that were procured at low wholesale prices have decreased considerably due to last-minute demand," adding that inventories bought at higher wholesale prices began to be sold earlier than expected.

In the first round of subsidies, the government will provide 30.2 yen per litre to curb the average pump price to around 170 yen per litre. Without the subsidy, the price was projected to exceed 200 yen next week.

The effect of the subsidy is expected to appear in retail prices in a week or two. Still, an industry official said that concerns about disruptions to crude oil supplies mean that gas stations are likely to refrain from lowering prices.

[Copyright The Jiji Press, Ltd.]