Institution: Middle East Conflict Escalation Poses Upside Inflation Risk Pressure on Japan

MaticHoleFiller · 2026-03-12T22:13:26+00:00

Hirofumi Suzuki of SMBC stated that the Middle East conflict has had a limited impact on Japan's inflation so far, but a 20% increase in crude oil prices would raise CPI by approximately 0.3 percentage points. He believes this increases the risk of upward price pressure, while it could also delay the Bank of Japan's rate hike, as accelerated inflation could have negative effects on economic activity.

MaticHoleFiller

2026-03-12 22:13:26

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SMBC’s Hirofumi Suzuki stated that the Middle East conflict may have a limited impact on Japan’s inflation for now. However, the head of the research team in the Funding Department said that, based on a benchmark of $60 per barrel before the conflict began, a 20% increase in crude oil prices would raise Japan’s CPI by about 0.3 percentage points. Suzuki said, “This increases the risk that the overall upward pressure on prices could intensify significantly.” However, Suzuki added, “The Bank of Japan’s rate hike could be delayed. While accelerating inflation is a concerning issue, the negative impact on economic activity could also be quite substantial.”

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