Japan’s wholesale inflation hits record high in June

Japan’s wholesale inflation hit a record high in June due to a weaker yen and higher global commodity prices, fueling speculation that the Bank of Japan (BOJ) may raise interest rates at its July 30-31 policy meeting.

The Corporate Goods Price Index (CGPI) rose by 2.9 per cent year-on-year in June. This is the highest growth rate since August 2023 and the seventh consecutive month of reaching record highs.

The import price index increased by 9.5 per cent year-on-year in June, marking the highest gain since February 2023. This rise is attributed to the yen’s depreciation, leading to higher import costs.

The data confirmed intensifying inflationary pressures in Japan. Beyond the yen’s weakness, rising global commodity costs and the end of gasoline and fuel subsidies are contributing factors.

Governor Kazuo Ueda has indicated the central bank is open to raising rates if it believes Japan can achieve its two per cent inflation target sustainably.

Attribution: Reuters