Japan’s wholesale inflation hits a three-year high, but the yen remains weak ahead of a potential BoJ rate hike next week.
Japan’s Producer Price Index rose 6.3% year-over-year in May, accelerating from April’s revised 5.3% and exceeding forecasts of 5.5%. The jump, driven by surging energy costs tied to Middle East tensions, marks the fastest wholesale inflation growth in three years.
The data reinforces expectations for a Bank of Japan rate hike at next week’s policy meeting, as policymakers grapple with a weakening yen and rising import costs. Market speculation points to further tightening in September and December to curb persistent price pressures.
USD/JPY held steady near 160.40 in Asian trading, with the yen failing to gain despite the inflation uptick. Safe-haven demand for the US dollar, fueled by renewed Middle East tensions, may keep the pair supported.