The BOJ said corporate prices rose 7.2% year on year in July, remaining at a high level. With raw-material and energy prices continuing to hold near elevated levels, market expectations for an early rate hike remain strong.
The domestic corporate price index released by the BOJ rose 7.2% year on year in July. Although the increase narrowed slightly from 7.3% in the previous month, it remained at a high level. Prices rose mainly for petroleum and coal products and chemical products, while information and communications equipment also made a significant contribution against the backdrop of global AI demand.
Month on month, higher fuel-cost adjustment rates and rising raw-material prices pushed up electricity, city-gas and water charges, food and beverages, nonferrous metals, and plastic products. Meanwhile, petroleum and coal products declined following a fall in crude oil prices in June.
The BOJ indicated at its July Monetary Policy Meeting that it would keep its policy rate at around 1%, but it heightened its vigilance toward the risk of rising prices. Market expectations for an early rate hike have increased, also amid yen-buying intervention overseas. The latest data once again indicate the persistence of inflationary pressure.
The situation shows that elevated raw-material and energy prices are affecting corporate prices and will remain a factor to watch in assessing price trends and the BOJ’s policy response.