BOJ Faces Rate Hike Pressure as Corporate Goods Prices Soar

The Bank of Japan (BOJ) is facing increasing pressure to hike interest rates as corporate goods prices in Japan continue to soar. According to preliminary figures from the BOJ, the Corporate Goods Price Index rose 7.2% year-over-year in July, marking a second consecutive month above 7%. The index level hit a record high of 135.8, with over 80% of surveyed items posting increases.

The price hikes were driven by rising resource costs, particularly petroleum and coal products, which rose 17.5%, and nonferrous metals, which surged 40.6%. Chemical products also climbed 12.9%, weighed down by supply concerns over naphtha. The BOJ is closely monitoring corporate price pass-through trends, including the impact of Middle East developments.

The persistently high corporate goods prices are putting pressure on small and micro enterprises with weak pricing power. According to Tokyo Shoko Research, bankruptcies attributed to 'high prices' exceeded year-earlier levels for an eighth consecutive month, reaching 93 cases in July.