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Japan PPI cools, but weak yen keeps import inflation near 30%
Japan’s import price inflation in yen terms stayed elevated near 30%, underscoring that currency weakness continues to magnify overseas cost pressure for businesses.
Japan producer inflation eased in July, but imported cost pressures remained high as a weaker yen continued to amplify overseas price increases, Action Forex reported. The Corporate Goods Price Index slowed to 7.2% year over year from a revised 7.3%, slightly below expectations of 7.4%, while the monthly rise moderated to 0.1% from 0.5%.
Electricity contributed the most to the monthly increase, adding about 0.23 percentage point, with declines in energy-related and chemical prices offering some offset. Excluding extra summer electricity charges, the index was unchanged versus June, suggesting domestic pipeline inflation was not accelerating as sharply as earlier in the year.
The report highlighted that external pressures were stronger. Yen-based import price inflation eased only slightly from 30.1% to 29.1% year over year, while the contract-currency measure fell from 18.1% to 17.7%, showing how currency weakness keeps imported inflation elevated for Japanese firms.
For the Bank of Japan, the data were described as offering limited comfort. Softer headline PPI and a flat underlying monthly reading reduce urgency for immediate action, but producer inflation at 7.2% and import costs close to 30% were characterized as difficult to dismiss, keeping the normalization case intact even as domestic momentum cools at the margin.