Toyota is raising the prices in Japan for the Prius and Harrier hybrids as well as some commercial models  in response to the soaring cost of steel, crude oil and other raw materials - the first hike in the country without a model makeover in three decades.

This price revision follows a similar move announced by the company for its American products last month where prices of 13 models were raised by an average $181 or 0.81 per cent. However, the Japanese hike is dearer.

The new suggested retail prices, announced Monday, show an average increase of 3 per cent for the two gas-electric hybrid models, and an average 2 per cent of several commercial vehicles.

Speculation had been rife that Japan's top automaker would raise some domestic prices soon, and Toyota has acknowledged that as risky because the domestic market is already sluggish. However, with prices of input materials showing no signs of abating, the company was forced to bite the bullet.

In May Toyota agreed to pay Nippon Steel Corp., Japan's largest steelmaker, as much as 30,000 yen a metric ton more for steel, setting a benchmark for other automakers in the country.

"Recent further price increases in raw materials have been larger than Toyota's cost reduction efforts are able to offset," Toyota said in a statement.

Starting next month, the Prius basic S model will go up by 73,500 yen ($668) to 2.38 million yen ($22,000). The Harrier Hybrid Premium S Package will go up by 136,500 yen ($1,240) to about 4.76 million yen ($43,000), Toyota Motor Corp. said in a release. Commercial vehicles affected include some Dyna/Toyoace trucks and Probox vans.

Toyota, along with rivals Honda Motor Co. and Nissan Motor Co., has forecast lower earnings this fiscal year, partly because of rising material costs. The three automakers, which have boosted prices overseas, have hesitated to do so domestically after Japan's stagnant wages dragged down vehicle sales. Nissan said it may follow Toyota in raising commercial vehicle prices.

Nissan CEO Carlos Ghosn has urged Toyota to pass on rising costs to customers to make it easier for smaller companies to follow. Nissan forecasts net income in the year ending 31 March will fall 30 per cent.

At Honda, higher raw-materials costs will trim operating profit by 199 billion yen this fiscal year, more than double the company's initial estimate of 74 billion yen, Executive Vice President Koichi Kondo said on 25 July.

Honda at that time reiterated net income may fall 18 per cent to 490 billion yen this fiscal year. He said that the company may pass on higher costs to customers when it releases revamped models.

The last time Toyota raised prices on Japan models was in 1974, by 10 per cent, in the wake of the first oil shock. It also hiked prices in 1973, by 7 per cent, as well as on its commercial vehicles such as trucks and vans in 1992.

Otherwise, Toyota has not raised prices in Japan except for remodeling that happens only once every several years in which improved features are added.

Although Toyota has averted some of the serious troubles of its U.S. rivals General Motors Corp., Ford Motor Co. and Chrysler LLC, even Toyota is struggling to fight skyrocketing energy prices, the crunch of material costs and fears of stagnation on global markets.

Toyota, which also makes Lexus luxury models and the Camry sedan, reported a 28 per cent drop in its April-June quarterly net profit. It is forecasting its first full-year profit decline in seven years as it faces more problems from the weakening US market. (See: Toyota manages profitable quarter even as it declares biggest profit drop in five years)