Key facts
- Japan's producer price index rose 7.2% in July from a year earlier.
- The index rose 0.1% month-on-month in July.
- The yen-based import price index increased by 29.1% year-on-year in July.
- The Bank of Japan noted that underlying inflation could exceed its target.
Japan's annual wholesale inflation continued its surge in July, with the producer price index rising 7.2% from a year earlier. This data underscores broadening price pressures and strengthens market expectations for an interest rate hike by the Bank of Japan in September. On a month-on-month basis, the index increased by 0.1% in July. The yen-based import price index also saw a significant rise of 29.1% year-on-year, indicating that currency weakness is contributing to higher import costs and overall inflation. In its July meeting, the BOJ kept policy steady but warned that underlying inflation might surpass its target, signaling a potential rate increase as early as September.