Japan’s wholesale inflation spikes in July, bolsters rate-hike chance

[TOKYO] Japan’s annual wholesale inflation continued its surge in July, data showed on Thursday (Aug 13), highlighting broadening price pressures and reinforcing market expectations of an interest rate hike in September.

The producer price index rose 7.2 per cent in July from a year earlier, after a revised 7.3 per cent gain in June, Bank of Japan (BOJ) data showed. It compared with market forecasts for a 7.4 per cent increase.

The data came in the wake of growing hawkish communication from the BOJ including a summary of opinions at its July meeting, where some policymakers called for speeding up the pace of rate hikes to combat inflation risks.

On a month-on-month basis, the index edged up 0.1 per cent in July, after a revised 0.5 per cent increase in June, the data showed.

The yen-based import price index rose 29.1 per cent in July from a year earlier, after a revised 30.1 per cent surge in June, a sign the currency’s weakness was pushing up import costs and broader inflation.

The BOJ kept policy steady in July, but warned for the first time that underlying inflation could exceed its target and said future discussions would focus on upside price risks, signalling the chance of a rate hike as soon as September. REUTERS