Japan's July wholesale inflation continued to climb, driven by a broadening range of price pressures, according to data released on Thursday. This development has strengthened market expectations for an interest rate hike in September. The Bank of Japan's data showed that the producer price index rose 7.2% in July compared to the same month last year, following a revised 7.3% increase in June. Market forecasts had anticipated a 7.4% rise.

The data emerges against the backdrop of increasingly hawkish signals from the Bank of Japan, including the release of a summary of opinions from its July meeting, where some policymakers called for a faster pace of rate hikes to address inflation risks. On a month-over-month basis, the index edged up 0.1% in July, compared to a revised 0.5% increase in June. The yen-denominated import price index surged 29.1% in July from a year earlier, following a sharp revised 30.1% increase in June, indicating that the yen's weakness is driving up import costs and thereby lifting overall inflation.

The Bank of Japan maintained its policy unchanged last month but issued its first warning that core inflation could exceed its target. It also indicated that future discussions would focus on upside risks to prices, signaling that a rate hike could come as early as September.