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Toyota has announced price hikes for some of its hybrid and commercial vehicles in Japan in an effort to cushion its profits from the impact of soaring material costs.

Japan's largest automaker said on Monday it would increase the retail price of its popular Prius hybrid by three per cent from September 1. Prices for commercial vehicles will rise by two per cent on average.

Toyota said that so far it had been able to offset soaring material prices by cutting costs, but with such expenses expected to remain high it decided to raise the price of vehicles that use large amounts of steel or rare metals.

It is believed to be the first time since 1974 that the auto giant has raised the domestic prices of existing passenger vehicles, rather than waiting for the launch of new models.

The price of iron ore, a vital material to make steel, has soared in recent years due to rising demand, particularly in fast-growing China and India.

Nissan, Japan's third largest automaker, has indicated that it is waiting for market leader Toyota to raise vehicle prices before it follows suit.