A customer places a Japanese 1,000 yen bill at the checkout counter while shopping at Akidai YK Supermarket in Tokyo, Monday, June 27, 2022. Japan’s core consumer inflation in June exceeded the central bank’s 2% target for the third straight month, as the economy faces pressure from soaring global raw material prices that are pushing up Japan’s import costs.
Kiyoshi Ota | Bloomberg | Getty Images
Official data released on Thursday showed Japan’s producer price inflation slowed slightly in July to 7.2% from a year earlier, lower than analysts expected.
The figure compares with the 7.4% expected by economists polled by Reuters, and is down from a revised 7.3% in June.
Electricity prices contributed the most to the producer price index in July, increasing by 0.23 percentage points compared to June. This was partially offset by lower prices for energy and chemicals.
Japan has been plagued by soaring energy prices, which have also led to a spike in overall corporate import inflation, and rising dollar payments are putting further pressure on the yen.
The yen-based import price index rose 29.1% in July compared to a 30.1% rise in June, indicating that the weaker yen continues to push up import costs.
of circle The currency hit a multi-decade low against the dollar in late July, and was close to $164 to the dollar before coordinated intervention by Japan and Washington strengthened it towards the end of the month, but it has already lost more than 50% of its intervention-driven gains.
However, despite the high PPI, consumer inflation remains relatively low, with headline inflation at 1.9% and core inflation at 1.6% in June.
Analysts previously told CNBC that the low consumer inflation rate was due to subsidies handed out by Gao’s government in an effort to protect consumers from soaring energy prices.
In their summary of opinions at the July meeting, BOJ board members warned of the risk of an upward swing in prices due to rising crude oil prices, and some members called for accelerating interest rate hikes to curb inflation.
