US Markets
Japan Producer Prices Surge as Iran Conflict Drives Up Fuel Costs
Japan's wholesale prices rose at their fastest annual pace in nearly three years in April as the Iran conflict drove up fuel and chemical costs, government data showed Friday, reinforcing expectations the Bank of Japan could raise interest rates as soon as June.The corporate goods price index, which tracks the prices companies charge each other for goods and services, rose 4.9% from a year earlier. The figure marked a sharp acceleration from 2.9% in March and came in above market expectations.On a monthly basis, producer prices increased 2.3%, reflecting broad gains across energy categories including petroleum, electricity and chemicals.The latest reading adds to signs that external shocks are feeding through Japan's import-dependent economy. The yen-based import price index jumped 17.5% from a year earlier, its fastest rise since late 2022, as higher crude oil prices and a weaker currency lifted costs for firms.Energy-related items were a key driver of the monthly rise. Petroleum and coal products contributed 0.75 percentage points, while electric power, gas and water added 0.47 percentage points. Chemical-related goods also added 0.48 percentage points, reflecting higher prices for inputs such as ethylene, propylene and xylene.Export and import prices also pointed to broad cost pressures. The export price index rose 3.3% from a month earlier, led by other primary products and manufactured goods, which contributed 1.48 percentage points, and chemicals and related products, which added 1.11 percentage points.The import price index increased 4.9% on the month, with petroleum, coal and natural gas contributing 4.19 percentage points, making it the dominant driver of the rise. Electric and electronic products added 0.32 percentage points, while chemicals and related products contributed 0.15 percentage points.The inflation data has sharpened attention on the Bank of Japan's policy path after board member Kazuyuki Masu said recently that rates should be raised as early as possible if there are no clear signs of economic slowdown. His comments added to growing market bets that the central bank could move again as soon as June.Three BOJ board members had already dissented at the previous policy meeting, pushing for a rate increase, underscoring the split within the central bank over the pace of normalization.The broader concern for policymakers is whether higher energy costs remain confined to a narrow set of goods or begin to spread across a wider range of products, potentially embedding more persistent inflation in the economy.
Nikkei 225
