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.