Japan’s producer price gains stay elevated, backing BOJ hikes

Prices for Japan’s corporate goods rose at a faster pace than expected in August, supporting the case for the Bank of Japan to keep raising interest rates to stem upside inflation risks.

The measure of input prices for Japanese firms rose 7.6% in August from a year earlier, the BOJ reported Friday. The result beat the 7.4% median forecast of economists even as gains slowed slightly from the revised 7.7% in July, which was the highest since February 2023. On a monthly basis, prices fell 0.2% after an upward revision to 0.4% in the previous month’s result.

The advance in the producer price index was led by oil and coal products, chemical products, information and communications equipment, and nonferrous metals, which was the case in July as well.

The results show that companies remain under pressure to pass on to customers rising input costs stemming from higher prices for energy, shipping and packaging, and increases in wages amid the tight labor market.

The BOJ is widely expected to raise its benchmark interest rate by a quarter point to around 1.25% on Sept. 18.