June 16 (Bloomberg) -- Raw tuna is giving Tateki Suzuki a headache.

He is torn between charging more for a serving of tuna sushi and risking a customer exodus from the 28 stand-up restaurants he manages in Tokyo. ``Our whole sales concept is 75 yen (65 cents) a piece,'' says Suzuki, 53. ``We have to protect that.''

Wholesale prices for Japan's favorite fish have surged as much as 84 percent in the past 12 months because of rising fuel costs and shrinking catch quotas. With the nation just emerging from seven years of deflation, retailers haven't been able to pass on the increase to consumers.

``We can't raise retail prices so much because competition is tough and we'll lose customers,'' says Kaori Watanabe, a spokeswoman for Chiba-based Aeon Corp., Japan's biggest retailer by sales, which operates 380 supermarkets.

Aeon has kept the price of frozen tuna within a band of 1,980 yen to 2,480 yen a kilogram (2.2 pounds) this year, Watanabe says. At Tokyo's Tsukiji fish market, the world's biggest, wholesalers charge 1,250 yen to 1,580 yen a kilogram, says Masaki Okahata, a spokesman for Sojitz Corp., Japan's second-largest tuna trading company.

Depending on the species, wholesale prices for frozen tuna have jumped 22 percent to 61 percent in a year, according to the Japan Fisheries Information Service Center in Tokyo.

``Stores can't just pass on a 40 percent cost increase to consumers,'' says Yoshikazu Nahata, a spokesman for Zen-Nippon Shokuhin Co., which operates 1,700 supermarket franchises that specialize in fresh food.

Fresh Tuna

Fresh tuna is even more prohibitive. High-end restaurants and sushi bars are paying 5,188 yen a kilogram -- 84 percent more than in 2005, government figures show.

Retailers are having difficulty passing rising tuna prices on to consumers who aren't confident the period of deflation has ended. While producer prices rose 3.3 percent in May from a year earlier, core consumer prices have gained only about 0.5 percent.

The Bank of Japan on June 15 kept its key interest rate near zero percent after a 19 percent drop in the Nikkei 225 Stock Average over the past seven weeks.

Wholesale tuna prices are rising as catches shrink.

Rising costs are discouraging some fishermen from putting to sea and crimping profits for those that leave port, says Satoru Akatani, a spokesman at the Japan Tuna Fisheries Cooperative Association in Tokyo. Only 400 of Japan's 500 registered tuna boats are operating, he estimates.

Bunker Fuel

Japan had 620 tuna boats in 2000, says Toshitsugu Shikada, deputy manager of the marine resources unit at the Ministry of Agriculture, Forestry and Fisheries.

Fishermen in the northern port city of Shiogama last year demonstrated against rising fuel prices. The cost of the bunker fuel used by fishing boats has risen 80 percent to 68,000 yen a kiloliter since September 2003, says Hiroyuki Hiratsuka, a member of Shiogama's fishery association.

``Even the price of Styrofoam storage boxes is rising,'' Hiratsuka says. ``More boats are stopping.''

Reduced catches are also driving up prices after dwindling tuna stocks worldwide led to stricter enforcement of quotas last year, says Helga Josupeit, a fisheries industry officer at the United Nation's Food and Agriculture Organization in Rome.

Taiwan, Japan's biggest tuna supplier, in November agreed to cut its big-eye tuna catch by 69 percent to 4,600 tons after Japan complained that the country was exceeding its quota for Atlantic tuna. Taiwan also agreed to reduce its big-eye fleet to 280 boats by the end of 2007, from 474 last year, Japan's Fisheries Agency said in a June 8 statement.

The big-eye species accounts for about half of all tuna imported by Japan, according to government figures.

Toyoda, a chain of 38 sushi shops in Tokyo, charges 220 yen for two pieces of tuna sushi. It has held down prices so far, says Masaji Goda, the general manager.

``It is impossible to say that the situation isn't severe,'' Goda says.

To contact the reporter for this story: Yasumasa Song in Tokyo at Ysong9@bloomberg.net.

Last Updated: June 15, 2006 21:21 EDT