BOJ Hike Odds Rise as Japan's Wholesale Inflation Remains Hot

Japan's wholesale inflation remains high, according to new data from the Bank of Japan. The producer price index rose 7.2% in July, a slight decrease from the 7.3% spike in June but still above market forecasts for a 7.4% increase.

The BOJ has been watching this trend closely, particularly after a summary of opinions at its July meeting revealed some policymakers arguing for a faster pace of rate hikes to counter inflation risks.

Some analysts believe that renewed tension in the Middle East will continue to push up crude oil prices, which could further drive up energy and other goods costs. This has led Masato Koike, senior economist at Sompo Institute Plus, to predict that wholesale inflation will re-accelerate.

The yen's weakness is also seen as a contributing factor, with the import price index rising 29.1% in July from a year earlier.