Japan’s wholesale inflation hits 4%, keeps BoJ rate-hike bets alive

Japan's annual wholesale inflation hit 4.0 per cent in February, data showed on Wednesday, underscoring pressure from rising raw material costs that will keep alive market expectations of a near-term interest rate hike by the central bank.

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Wholesale prices, which are a leading indicator of consumer inflation, extended their year-on-year rises to a full four years with a recent spike in the price of rice, eggs and fresh food squeezing companies’ margins, the data showed.

The data adds to growing signs of inflation-ary pressure, including from major Japanese firms offering bumper pay increases in this year’s wage talks with unions. But the rise in living costs and market volatility caused by US President Donald Trump's tariff threats could weigh on Japan's economy and discourage the Bank of Japan from raising rates too quickly, some analysts say.

“It’s worth noting a rebound in consumption, which is necessary to support underlying inflation, is being delayed," said Takeshi Minami, chief economist at Norinchukin Research Institute.