Overview
- The Bank of Japan reported on Friday that corporate goods prices rose 7.1% year-on-year in June with a 0.4% month-on-month gain, the biggest sustained run of wholesale inflation since early 2023.
- The rise was led by oil, gasoline, electricity and plastics and was amplified by a weak yen and higher shipping costs after disruptions around the Strait of Hormuz.
- Companies are increasingly passing higher input costs on to customers, and large wage settlements above 5% for a third straight year are supporting stronger domestic price pressure.
- The BOJ raised its short-term policy rate to about 1% in June and, according to sources, will likely keep policy tightening guidance in its July outlook while it updates growth and price forecasts.
- Investors will watch summer consumer price releases on August 21 and September 18 for signs of broader consumer inflation and for signals on the timing of another rate increase that markets expect by year-end.