Japan's Wholesale Inflation Hits 3-Year High as Energy Costs Surge
Japan's producer price index rose 6.3% year-over-year in May, the fastest pace in three years, driven by higher energy costs linked to Middle East tensions and a weak yen. The acceleration exceeds market forecasts and follows a revised 5.3% gain in April, with nonferrous metals, chemicals, and petroleum goods seeing the largest price increases. The data strengthens expectations for the Bank of Japan to raise interest rates at its meeting next week, adding pressure for continued monetary tightening.
Japan's wholesale inflation accelerated sharply in May, with the producer price index rising 6.3% year-over-year, surpassing economist forecasts of 5.5% and marking the fastest increase since March 2023. The surge was primarily driven by higher prices for nonferrous metals, chemicals, and petroleum products, as the effective closure of the Strait of Hormuz pushed up crude oil and naphtha costs. The weak yen also contributed significantly to import price inflation, with the yen-based index jumping 25.5% in May. On a month-on-month basis, wholesale prices rose 0.9% in May after a revised 2.8% gain in April. The data reinforces expectations that the Bank of Japan will raise its policy rate from 0.75% to 1.0% at its meeting ending June 16, with analysts noting that producer price inflation typically precedes consumer inflation and will likely sustain pressure for further rate hikes.
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Japan wholesale inflation accelerates to fastest in 3 years as energy costs spike
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