Japan's producer prices rose 7.2% year over year in July, missing the 7.4% increase forecasted by markets and slowing slightly from the revised 7.3% growth recorded in June.
The June increase marked the fastest pace in over three years.
On a month-on-month basis, the producer price index increased 0.1%, coming down from a revised 0.5% rise in the prior month, the Bank of Japan said in a Thursday release.
Despite the slightly softer headline figures, factory-gate prices in Japan remained elevated, adding pressure on the Bank of Japan to raise rates. In its latest summary of opinions, the BOJ signaled that persistent cost pressures, delayed impacts from U.S. tariffs, and ongoing risks from commodity and food price volatility keep the possibility of future interest rate hikes firmly on the table.
The central bank recently kept its interest rate on hold at a three-decade high of 1%, citing the need to support moderate economic growth amid external uncertainties. However, officials continue to monitor underlying inflation trends closely as they edge toward the 2% target.
Higher utility costs, including electricity, gas, and water, were the biggest contributor to the PPI in July, adding 0.23% to the index.
The BOJ is set to publish consumer inflation data for July next week. In June, the annual headline consumer inflation accelerated to a six-month high of 1.7% from 1.5% in May.
