Producer Price Inflation Continues to Accelerate in Japan for the Sixth Consecutive Month
The Bank of Japan reported in its Tuesday release that the price index rose by 3% year-on-year in July.
Topic
Energy Costs
This increase was driven by higher energy costs following the expiration of government subsidies for public utilities.
However, it fell short of economists’ expectations, which had forecast a 3.1% rise.
On a monthly basis, prices rose by 0.3%, aligning with expert predictions.
Decline effect
The report also highlighted a 10.8% increase in yen-denominated import costs,
reflecting the impact of the yen’s depreciation on inflation.
Additionally, electricity, gas, and water costs increased by 6.7% compared to the same period last year.
The Yen’s Decline
The yen’s decline this year has exacerbated inflationary pressures by increasing the costs of importing raw materials, food, and fuel. Following the Bank of Japan’s decision to raise the benchmark interest rate on July 31, Governor Kazuo Ueda stated that the authorities would continue to raise rates if economic growth and price expectations were met. His firm stance led to a rebound in the yen and a drop in stocks, prompting his deputy, Shinichi Uchida, to emphasize last week that the bank would be cautious about raising rates if financial markets were unstable.
Producer Price Inflation Continues to Accelerate in Japan