Japan’s Producer Prices Rise 7.1 Percent in June, the Fastest Since March 2023, on Surging Import Costs
Japan’s corporate goods price index rose 7.1 percent in June from a year earlier, the fastest annual pace since March 2023, accelerating from a revised 6.6 percent in May and beating market expectations of about 6.8 percent, Bank of Japan data showed on Friday. On the month, producer prices rose 0.4 percent.
Energy and metals drove the acceleration. Petroleum and coal product prices jumped 22.8 percent from a year earlier, the largest single contribution to the monthly rise, while nonferrous metals surged 39.2 percent. Food was a much smaller driver, with beverage and food prices up 4.0 percent.
The upstream pressure is concentrated in import costs. Yen-based import prices climbed 29.7 percent from a year earlier, the fastest pace since October 2022, as the weak yen compounded elevated energy and raw-material costs, Reuters reported. Import price growth outpaced overall producer inflation by 22.6 percentage points, our calculation.
The acceleration from May was 0.5 percentage point on the revised figures, our calculation, and May itself was marked up from the initially reported 6.3 percent to 6.6 percent.
Why it matters: The Bank of Japan has warned that cost pass-through is proceeding faster than in the past, and Reuters reported that most analysts expect the policy rate to reach 1.25 percent by year-end. For MENA, Japan is a major buyer of Gulf crude and liquefied natural gas, and its surging yen-based energy import bill reflects the same elevated prices that flow through to Gulf export revenues.
Outlook: The tests are whether June’s producer-price surge passes into consumer inflation over the summer and how the Bank of Japan weighs it at its next policy meeting, with the yen’s path against the dollar the key variable in the import-cost equation.
| Indicator, year on year | June | May |
|---|---|---|
| Producer prices | +7.1% | +6.6% revised |
| Producer prices, month on month | +0.4% | +1.1% revised |
| Import prices, yen basis | +29.7% | +26.1% revised |
| Petroleum and coal products | +22.8% | – |
| Nonferrous metals | +39.2% | – |
| Beverages and foods | +4.0% | – |
Sources: Bank of Japan; Reuters.
