Pushed up by fossil fuel and utility bills, Japan's producer price index (PPI) rose 4.3% on year in March, inching up from a 4.2% on-year rise in February, reported the Bank of Japan on Thursday.

Japan's PPI soared during the COVID-19 pandemic era, striking a crest rise of 10.6% on-year in December of 2022. But producer prices cooled thereafter, and eased through 2023 and most of 2024.

However, in the latter months of 2024 and first months of 2025, the PPI has edged higher, a worrisome inflation signal to the Bank of Japan.

In general, Japan's PPI gauges prices of goods purchased by Japanese corporations. The PPI is distinct from the consumer price index (CPI) that measures prices at retail, faced by ordinary shoppers.

The PPI is considered one leading indicator of pending changes in the CPI, as retailers try to recoup costs, or pass on savings to shoppers.

Boosting the PPI in March were oil and coal product bills, which rose 8.6% on year, and utilities, including electricity, water and gas, which gained 6.4% on year.

The PPI for agriculture, forestry and fishery products rose 40.1% on year, in part reflecting higher rice charges.

The higher PPI inflation rate may pose a challenge for the Bank of Japan, which has a 2% annual target on the nation's CPI-core, that strips out fresh food bills.

In February, Japan's CPI-core inflation rate logged at 3% on year. The March PPI report provides little evidence that consumer inflation rates will soon recede to within the central bank's target.

The Bank of Japan next meets at the end of April, to ponder not only inflation, but the impact of Trump Administration tariffs, and sluggish real wage gains and consumer spending.