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Japan producer prices accelerate, boosting case for BOJ hikes

Producer prices rose 7.1% year over year in June, above the 6.8% forecast, while the yen stayed near a 40-year low versus the dollar.

Reported · Written up by our desk · Central Banks

Japan producer prices accelerated in June at the fastest pace since early 2023, reinforcing expectations that the Bank of Japan will continue tightening policy. Forexlive said the June producer price index rose 7.1% from a year earlier, beating the 6.8% forecast and following an upwardly revised 6.3% reading for May.

On a monthly basis, prices increased 0.4% in June versus an expected 0.3%, after an upward revision to April. The rise was led by categories including oil and petrol, electricity, and plastics, which have driven the recent increase in corporate costs.

Forexlive linked the stronger cost backdrop to inflation persistence, noting that firms appear more willing to pass higher input costs onto customers rather than absorb them. The outlet said this pattern aligns with the BOJ tracking whether inflation expectations are becoming more entrenched.

The story also highlighted the yen's position near a 40-year low against the dollar, which can add to imported cost pressure, including energy. Forexlive said the combined data support a steady BOJ tightening path, with rate markets likely to remain sensitive heading into autumn policy meetings.

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