Japan's wholesale inflation spikes in July, bolsters rate-hike chance

Japan's wholesale inflation accelerated in July, underscoring persistent price pressures and bolstering the likelihood of an interest rate hike by the Bank of Japan as early as September. The producer price index climbed 7.2% from a year earlier, a slight deceleration from June's revised 7.3% but still indicating robust inflation.

The data arrives amid increasingly hawkish signals from the central bank. Policymakers at the Bank of Japan's July meeting discussed speeding up rate hikes to counter inflation risks. While the bank maintained its policy stance last month, it issued its first warning that underlying inflation could exceed its target, signaling a potential shift in monetary policy.

Adding to inflationary concerns, the yen-based import price index surged 29.1% year-on-year in July. This significant rise suggests that the currency's weakness is driving up the cost of imports, further contributing to broader price increases across the economy. The monthly producer price index edged up 0.1% in July, following a 0.5% rise in June.