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Japan Producer Prices Surge on Iran Conflict, Bolstering BOJ Rate Case

Japan's corporate goods prices jumped in April by the most in 12 years, strengthening the case for the Bank of Japan to raise interest rates. Persistent inflationary headwinds tied to Middle East tensions underpin the pressure.

The spike mirrors similar pricing pressures across the US, where import and export prices posted their steepest gains in four years. Oil market volatility stemming from the Iran conflict has emerged as a primary driver of global price increases.

The inflation signals have triggered a reassessment of monetary policy expectations. Japanese investors responded by offloading US government bonds at their heaviest pace since 2022, reflecting shifting views on Federal Reserve action. Bond markets worldwide have sold off sharply, with yields climbing from Tokyo to Washington as traders brace for potential rate hikes from major central banks facing sustained cost pressures.