August's corporate goods price index reinforces what markets had already priced in, that the Bank of Japan is close to certain to raise rates to 1.25% at next week's meeting, so the immediate surprise value for JPY crosses is limited. The more interesting detail is the import price index, up 24.8% year on year, which points to continued yen weakness feeding directly into domestic cost pressures rather than easing as some had hoped. That keeps alive the more hawkish end of rate expectations, with analysts now pencilling in a further hike to 1.75% in the second quarter of 2027, earlier than previously anticipated. For JPY, the data supports the broader narrative of a BOJ playing catch-up on inflation, which should continue to underpin the currency against peers still years away from their own tightening cycles, though a hike that's already near fully priced tends to produce a smaller reaction on the day itself than the scale of the move might suggest.---Earlier:Nikkei, Kospi fall as US bond yields and inflation data spook markets--- Japan's wholesale prices came in hotter than expected again, leaving the Bank of Japan with little room to avoid a rate hike next week.Summary:Japan's corporate goods price index (CGPI) rose 7.6% year on year in August, above the 7.4% forecast, following a revised 7.7% gain in JulyOn a month-on-month basis, the index fell 0.2% in August, against expectations for a flat reading, after a revised 0.4% increase in JulyThe yen-based import price index rose 24.8% year on year in August, easing from a revised 29.3% surge in July but still reflecting the impact of yen weakness on import costsRising fuel costs linked to the Middle East conflict and higher import prices from a weak yen have added to inflation pressure on Japanese firmsMarkets are near fully pricing in a BOJ rate hike to 1.25% from 1% at next week's (16–17 September) policy meeting, following June's hike to a 31-year high of 1% and a hold in JulyAnalysts polled by Reuters now expect a further hike to 1.75% in the second quarter of 2027, earlier than previously forecastJapan's wholesale inflation remained elevated in August, data released Friday showed, adding to the pressure on the Bank of Japan to raise interest rates at its policy meeting next week. The corporate goods price index, which tracks the prices companies charge each other for goods and services, rose 7.6% from a year earlier, ahead of a median market forecast for a 7.4% increase and following a revised 7.7% gain in July. On a monthly basis, the index slipped 0.2% in August after a revised 0.4% rise the previous month.The data follows a run of hawkish signalling from the BOJ that has already pushed markets close to fully pricing in a rate increase to 1.25% from the current 1% at next week's meeting. BOJ Governor Kazuo Ueda has repeatedly pointed to wholesale inflation as a key indicator the central bank is watching closely, since the pace at which firms can pass rising costs through to consumers helps determine how durable the broader inflation picture is likely to be.A significant driver of the pressure came from import costs. The yen-based import price index rose 24.8% year on year in August, moderating from a revised 29.3% jump in July but still historically high, underscoring how a weak yen continues to push up the cost of goods and materials brought into the country. Rising fuel prices tied to the ongoing Middle East conflict have compounded that pressure, adding a second inflationary channel alongside currency weakness. Taken together, the BOJ has warned of the risk that Japan's inflation could overshoot its target rather than settle at a sustainable level.The central bank raised rates to a 31-year high of 1% in June, judging that Japan was approaching a durable achievement of its 2% inflation target, before holding steady in July while flagging a strong likelihood of near-term tightening. Friday's data does little to change that trajectory. Analysts polled by Reuters now expect the BOJ to proceed with a hike to 1.25% next week, followed by a further increase to 1.75% in the second quarter of 2027, a timeline that has moved earlier as concerns mount over both broadening domestic price pressures and continued yen weakness. With inflation running persistently above target across multiple measures, the path of least resistance for Japanese monetary policy continues to point toward further, and potentially earlier, tightening. This article was written by Eamonn Sheridan at investinglive.com.