Japan's Wholesale Inflation Stays Elevated, Fueling September Rate Hike Bets

Japan's wholesale inflation remained near multi-decade highs in July, keeping alive market expectations that the central bank will raise interest rates as soon as next month.

The producer price index climbed 7.2% in July from a year earlier, the Bank of Japan reported on Thursday. That was a slight cooling from June's revised 7.3% gain, but still below the 7.4% increase economists had forecast.

On a monthly basis, wholesale prices inched up 0.1% in July, a sharp slowdown from the revised 0.5% rise recorded in June.

The data arrives amid increasingly hawkish signals from the BOJ. Minutes from its July policy meeting showed some board members urging a faster pace of monetary tightening to counter inflation risks.

The yen's persistent weakness continues to amplify price pressures. The yen-based import price index jumped 29.1% year-on-year in July, following a revised 30.1% surge in June, underscoring how currency depreciation is feeding through to broader costs.

The BOJ left policy unchanged last month but, for the first time, warned that underlying inflation could overshoot its target. It also said future discussions would centre on upside price risks, a shift that markets read as a clear hint of a possible rate hike in September.