Japan Producer Prices Accelerate in June, Reinforcing BOJ Rate-Hike Case

Japan's producer prices rose 7.1% year over year in June, accelerating from a revised 6.6% increase in May, according to preliminary data released by the Bank of Japan on Friday. The reading was higher than the Investing.com consensus forecast of a 6.8% increase. On a monthly basis, the corporate goods price index, which measures the prices companies charge each other for goods and services, rose 0.4% in June, slowing from a revised 1.1% increase in the previous month. The annual increase was driven by higher prices for petroleum and coal products, electricity, gas and water, plastic products, and lumber and wood products, while lower prices for agricultural, forestry and fishery products partly offset the gains. Combined with recent data showing resilient credit demand and solid business activity, the figures reinforce the Bank of Japan's case for further monetary policy normalization. The BOJ raised its policy rate to 1% earlier in June, the highest level since 1995, while signaling it would continue to assess whether sustained wage growth and broadening price pressures warrant further policy tightening. Markets continue to expect another rate hike by year-end, with.