By Kentaro Sugiyama and Makiko Yamazaki
Japan's wholesale inflation accelerated in July, with the pace of year-on-year growth the fastest in 11 months, data showed on Tuesday, as a weak yen pushed up commodity import bills that were already high.
The corporate goods price index (CGPI), which measures the price companies charge each other for goods and services, rose 3% in July from a year earlier, Bank of Japan data showed, matching a median market forecast.
The index, at 123.1, hit a record high for the eighth straight month. It accelerated from June's 2.9% increase.
Inflation data will be scrutinised by the central bank, which raised interest rates on July 31 to levels unseen in 15 years and signalled its readiness to hike borrowing costs further.
The yen-based import price index climbed 10.8% in July from a year earlier, accelerating from a revised 10.6% rise in June, and reflecting the yen's weakness and rising raw materials prices.
Oil retreats as markets refocus on demand concerns
Oil prices edged lower on Tuesday, breaking a five-day streak of gains, as markets refocused on concerns about demand after OPEC on Monday cut its forecast for demand growth in 2024 due to softer expectations in China.
Global benchmark Brent crude futures fell 78 cents, or 0.95%, to $81.52 a barrel at 0330 GMT. U.S. West Texas Intermediate crude futures slipped to $79.33 a barrel, down 73 cents, or 0.91%.
Brent had gained more than 3% on Monday, while U.S. crude futures had risen more than 4%.
The Organization of the Petroleum Exporting Countries' (OPEC) global demand forecast reduction for 2024 highlighted the dilemma faced by the wider OPEC+ group in raising production from October.
The cut to OPEC's 2024 forecast was the first since it was made in July 2023, and comes after mounting signs that demand in China has lagged expectations due to slumping diesel consumption and as a crisis in the property sector hampers the world's second-largest economy.
"Demand concerns for crude oil remain on the table," said Yeap Jun Rong, market strategist at IG, adding that reservations lingered ahead of upcoming U.S. inflation data.
"Any reflection of higher economic risks could weigh on oil prices, at a time when OPEC+ has cut their 2024 demand forecast and are set to roll back on their production cuts starting October, which may point to a less tight oil market ahead," Yeap said.
But he added investors remained watchful of the latest geopolitical tensions.
The Middle East conflict has escalated, with the U.S. preparing for what could be significant attacks by Iran or its proxies in the region as soon as this week, White House national security spokesperson John Kirby said on Monday.
Any attack could tighten access to global crude supplies and boost prices. An assault could also lead the United States to place embargoes on Iranian crude exports, potentially affecting 1.5 million barrels per day of supply, analysts said.
Markets are also preparing for Wednesday's U.S. consumer price index report that will give a crucial read on inflation, with investors now worried that an overly depressed CPI number will fan fears of a downturn.
Money markets have even bets on a 25- or 50-basis-point cut in U.S. interest rates in September, expecting a total easing of 100 bps by the end 2024, CME's FedWatch Tool showed.
Rate cuts tend to raise economic activity, which increases the use of energy sources such as oil.
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