Inflationary pressures are rising in Japan:
Japan's PPI inflation rose +0.9% MoM in May, the 2nd-highest reading since October 2022.
Furthermore, April's reading was revised higher by +0.5 percentage points, to +2.8%, the highest since 2014.
YoY, producer prices surged +6.3%, the biggest annual increase since March 2023.
This was driven by surging costs across petroleum and coal products, electricity, gas, and chemicals since the start of the Iran War.
Rising input costs are now increasing pressure on Japanese firms to pass higher prices on to consumers, raising the risk of broader inflationary pressures.
This strengthens the case for the Bank of Japan to proceed with a rate hike this week, with additional hikes possible later in the year if energy prices remain elevated.
Inflation in Japan is accelerating.
Japan's May PPI inflation rose 0.9% MoM (2nd-highest since Oct 2022) and 6.3% YoY (largest annual increase since Mar 2023), driven by surging costs in petroleum, coal, electricity, gas, and chemicals amid the Iran War. April's reading was revised up to 2.8% (highest since 2014). Rising input costs are pressuring firms to pass costs to consumers, strengthening the case for a Bank of Japan rate hike this week and potentially later in the year if energy prices remain elevated.
关键要点
May PPI inflation: +0.9% MoM (2nd-highest since Oct 2022), +6.3% YoY (largest since Mar 2023)
April PPI revised higher to +2.8% (highest since 2014)
Cost surge driven by petroleum, coal, electricity, gas, and chemicals due to Iran War
Pressure on firms to pass higher prices to consumers, raising broader inflation risk
Strengthens case for BoJ rate hike this week, with additional hikes possible if energy prices stay elevated
