Inflation, measured by Japanese producer prices, rose in July, marking the sixth straight month of acceleration as the removal of utility subsidies pushed up energy costs.
The BOJ’s benchmark for input prices rose 3.0 percent from a year earlier, the BOJ said on Tuesday. The gain was below economists’ expectations for a 3.1 percent increase. Prices rose 0.3 percent from the previous month, matching the consensus estimate.
The report showed that yen-denominated costs of imported materials rose 10.8%, reflecting the impact of the weak yen on inflation.
Growth, which was higher than 2.9% in June, topped 3% for the first time since August 2023, when the index, which measures the cost of goods traded between companies, rose 3.4%.
The increase in July was due to rising material prices due to a weaker yen and the removal of government subsidies to cushion the impact of higher electricity and gas prices.
Of the 515 items surveyed, prices rose in 390, while prices fell in 105, the central bank said in a preliminary report.
By category, electricity, city gas and water rates rose 6.7%, the first increase in 13 months. Non-ferrous metal prices rose 18.5%, while copper and aluminum prices soared. Food and beverage prices rose 2.6%, reflecting moves by companies to pass on rising packaging and fuel costs to prices
“The resumption of government subsidies for electricity and gas from August is likely to lead to lower overall producer prices,” a BOJ official said.
Price increases on imported goods are likely to ease as the yen strengthens following the BOJ’s decision to raise interest rates further in late July.
The yen’s fall this year has put pressure on inflation by raising the cost of importing raw materials, food and fuel. BOJ Governor Kazuo Ueda said after the bank raised its benchmark interest rate on July 31 that authorities would continue to raise rates if the outlook for prices and growth materializes.
His aggressive tone was followed by a rally in the yen and a fall in stock prices, prompting his deputy Shinichi Uchida to pledge last week that authorities would not raise interest rates amid financial market volatility.
