The Domestic Corporate Goods Price Index released by the Bank of Japan rose 7.6% year on year in August, extending its elevated pace of growth. Petroleum and coal products stood out for their gains, fueling growing expectations that the data will support the case for a September rate hike.
According to Bloomberg, the Domestic Corporate Goods Price Index rose 7.6% year on year in August, exceeding the market forecast of 7.4%. Although the index fell 0.2% month on month, overall growth remained elevated.
Petroleum and coal products posted strong growth amid rising crude oil and naphtha prices, while prices for information and communications equipment and nonferrous metals continued to rise on stronger AI-related demand.
Electricity, city gas and water contributed to holding down the index following the resumption of government energy subsidies and an increase in the amount provided. Meanwhile, price pass-through of higher raw material costs progressed for food and beverages and plastic products.
Markets have been moving to price in a rate hike at the BOJ's monetary policy meeting on the 17th and 18th, while the BOJ is closely monitoring developments in the Middle East, AI demand and foreign exchange trends as inflation risks.