Producer prices climbed 4.7 percent from a year earlier, after a 3.9 percent gain in April, the Bank of Japan said in Tokyo today. The median estimate of 30 economists surveyed by Bloomberg News was for 4 percent.

Inflation is spreading in the world’s second-largest economy, draining income of households as well as businesses. The government this week said Japan’s longest postwar expansion may have ended as costlier energy and raw materials dissuade companies from hiring and investing.

“The wave of price increases is gradually spreading through the economy, but companies can only pass on part of those costs because demand remains weak,” said Yoshimasa Maruyama, a senior economist at BNP Paribas SA in Tokyo. “Businesses and consumers both have to bear the burden of higher prices.”

Japan’s corporate profits tumbled 17.5 percent in the first quarter from a year earlier, the most since 2001, a Finance Ministry report showed last week.

Nippon Oil Corp. and Yamazaki Baking Co. are among the companies increasing prices to cope with higher raw-materials costs. Yamazaki Baking, Japan’s largest bakery, raised prices of bread in May, the second increase in five months.

Crude oil hit a record US$139.12 a barrel last week. Gasoline in Japan soared to an unprecedented 171.9 yen a liter (US$6.19 a gallon) after major refiners including Nippon Oil and Idemitsu Kosan Co. increased wholesale prices.

The Bank of Japan’s overseas commodity index of 16 raw materials including oil, steel and grains, soared 56.2 percent to a record in May from a year earlier.

Central bank Governor Masaaki Shirakawa said last month that his board is watching whether the increase in oil prices will spread “through a surge in inflationary expectations.”

Japan’s core consumer prices have been climbing since October. Some 86.2 percent of households surveyed in April expected prices to keep rising, the second highest on record.

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