Japan wholesale inflation eases slightly to 7.2%, undershooting expectations
A customer places Japanese 1,000 yen banknotes on a checkout counter while making a purchase at an Akidai YK supermarket in Tokyo, Japan, on Monday, June 27, 2022. Japan’s core consumer inflation remained above the central bank’s 2% target for a third straight month in June, as the economy faced pressure from high global raw material prices that have pushed up the cost of the country’s imports.
Kiyoshi Ota | Bloomberg | Getty Images
Producer prices in Japan eased slightly in July to 7.2% year on year in July, missing analysts’ expectations, official data released Thursday showed.
The PPI reading was lower compared with the 7.4% expected by economists polled by Reuters, and was down from a revised 7.3% seen in June.
Electricity prices were the largest contributor to the producer price index in July, adding 0.23 percentage point to the increase compared to June. This was partly offset by a drop in prices in energy and chemicals.
Japan has been grappling with higher energy prices that have also led to steeper overall imported inflation for businesses, with higher dollar payments further pressuring the yen.
The yen based import price index climbed 29.1% in July, compared to a 30.1% rise in June, a sign that the yen’s weakness continues to push up import costs.
The yen had reached multi-decade lows against the U.S. dollar in late July, approaching 164 against the greenback before a coordinated intervention by Tokyo and Washington toward the end of the month strengthened the currency — but it has already lost over 50% of the intervention-led gains.
However, despite the high PPI, consumer inflation has remained relatively low, with headline inflation coming in at 1.9% for June and core inflation at 1.6%.
Analysts previously told CNBC that the low consumer inflation is due to subsidies handed out by the Takaichi administration as it attempts to shield consumers from higher energy prices.
In its summary of opinions for its July meeting, board members at the Bank of Japan had warned of an upside risk to prices due to higher oil prices, with some members calling for faster rate hikes so as to contain inflation.