Inflationary pressure is building in Japan.

Japan’s producer price inflation rose 0.9% month-over-month in May, marking the second-highest reading since October 2022.
Meanwhile, April’s figure was revised sharply higher by 0.5 percentage points to 2.8%, the strongest monthly reading since 2014.
On a year-over-year basis, producer prices jumped 6.3%, the largest annual increase since March 2023.
The increase has been driven by rising costs in petroleum and coal products, electricity, gas, and chemicals, particularly since the start of the Iran War.
Higher input costs are putting more pressure on Japanese companies to pass those increases on to consumers, raising the risk that inflation becomes broader and more persistent.
This adds to the case for the Bank of Japan to move forward with a rate hike this week, with more hikes possible later this year if energy prices remain elevated.
Japan’s inflation problem is accelerating.