TOKYO (April 10): Japan's annual wholesale inflation hit 4.2% in March, accelerating from the previous month, in a sign of persistent cost pressures that add to corporate pain from uncertainty over US tariff policy.

The data highlights the challenge the Bank of Japan (BOJ) faces in judging the timing of its next interest rate hike, particularly given push-pull forces exerted by mounting domestic inflationary pressure and the expected hit to economic growth from US President Donald Trump's tariffs.

The rise in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, exceeded a median market forecast for a 3.9% increase, and followed a 4.1% gain in February.

Prices rose for a broad range of goods, including a 3.1% year-on-year gain in the cost of food, and a 8.6% jump in petroleum and coal prices, central bank data showed on Thursday.

The yen-based import price index, however, fell 2.2% in March from a year earlier, after a 0.9% drop in February.

"Wholesale inflation is likely to slow ahead, due to falling commodity costs and the yen's rebound," which will help moderate consumer inflation, said Masato Koike, senior economist at Sompo Institute Plus.

Stubbornly high food costs and rising wages have kept consumer inflation above the BOJ's 2% target for nearly three years, underpinning market expectations that the central bank will continue raising interest rates from the current 0.5%.

But Trump's decision to impose sweeping tariffs on goods imports has complicated the BOJ's rate-hike path by threatening to derail a moderate recovery in Japan's export-heavy economy.

BOJ governor Kazuo Ueda said on Wednesday that the central bank must scrutinise "without preconception" whether the economy is on track to meet its projection, suggesting the chance of a pause in interest rate hikes as US tariffs jolt markets.

Uploaded by Liza Shireen Koshy