Japan’s wholesale prices continue to remain elevated as the weaker yen drives up import costs and pushes up corporate prices, with market attention focused on the possibility of a September BOJ rate hike.
The Corporate Goods Price Index rose 7.2% year on year in July, following a revised 7.3% increase in June, slightly below the market forecast of 7.4%. Month on month, the index rose a modest 0.1%.
Import prices have also risen sharply against the backdrop of the weaker yen. The yen-based Import Price Index rose 29.1% year on year in July, following a revised 30.1% increase in June. Views are spreading that higher procurement costs for imported goods could continue to be passed through to the domestic market.
The BOJ decided to maintain the status quo as of July, but remains alert to the accelerating risks from rising prices. Future discussions are likely to focus on the risk of accelerating inflation, increasing the possibility that the BOJ will consider a rate hike in September.