Japan Wholesale Inflation Stays Hot Ahead of BOJ Rate Decision

Japan's wholesale inflation remained high in July, according to data released on Thursday. The producer price index rose 7.2% year-over-year, slightly lower than market forecasts but near June's 7.3% spike.

The BOJ warned that underlying inflation could exceed its target due to mounting price pressures, signaling a strong chance of a September rate hike. Analysts predict the central bank will raise interest rates from 1% to 1.25% at its next policy meeting on September 17-18.

According to Masato Koike, senior economist at Sompo Institute Plus, wholesale inflation is expected to re-accelerate due to renewed tension in the Middle East pushing up crude oil prices and further yen falls lifting import costs.