Japan wholesale inflation eases slightly to 7.2%, undershooting expectations

Producer prices in Japan eased slightly in July to 7.2% year on year in July, missing analysts' expectations, official data released Thursday showed. The PPI reading was lower compared with the 7.4% expected by economists polled by Reuters, and was down from a revised 7.3% seen in June. Electricity prices were the largest contributor to the producer price index in July, adding 0.23 percentage point to the increase compared to June. This was partly offset by a drop in prices in energy and chemicals. Japan has been grappling with higher energy prices that have also led to steeper overall imported inflation for businesses, as higher dollar payments have contributed to the weakness in the yen. However, despite the high PPI, consumer inflation has remained relatively low, with headline inflation coming in at 1.9% for June and core inflation at 1.6%. Analysts previously told CNBC that the low consumer inflation is due to subsidies handed out by the Takaichi administration as it attempts to shield consumers from higher energy prices. In its summary of opinions for its July meeting, board members at the Bank of Japan had warned of an upside risk to prices due to higher oil prices, with some members calling for faster rate hikes so as to contain inflation. This is breaking news, please check back for updates.