According to Jinshi, Japan's domestic corporate commodity price index in May reached its highest annual rate in nine months. Although this data seems to provide a reason for the Bank of Japan to continue raising interest rates, it actually makes it more difficult to raise interest rates. Because this cost-push inflation may reduce consumption and the economy, thereby reducing the possibility of achieving demand-driven inflation, which the Bank of Japan hopes to achieve before further phasing out stimulus. Takeshi Minami, chief economist at Norinchukin Research, said that consumer inflation may not slow down too much due to rising wholesale prices and energy prices expected to rise sharply in the summer. But the Bank of Japan needs to wait for wages to rise and help consumption recover before raising interest rates again.
