Japan's wholesale inflation remained elevated in July, adding to pressure on the Bank of Japan (BOJ) to consider another interest-rate increase as policymakers attempt to keep rising prices from becoming entrenched in the economy.

The country's corporate goods price index, which measures the prices companies charge one another for goods and services, increased 7.2% from a year earlier in July, according to data released by the Bank of Japan on Thursday. The increase was slightly below the 7.4% expected by economists and just below the revised 7.3% increase recorded in June.

The latest figures show that price pressures remain significantly above the BOJ's long-term 2% inflation target. Higher prices for metals, chemicals and other raw materials have contributed to the increase, while the conflict in the Middle East has added pressure to energy and commodity costs.

Japan is also facing higher import costs because of the weaker yen. The country's import price index rose 29.1% year over year, highlighting how currency movements are making foreign goods and raw materials more expensive for Japanese companies.

The combination of higher import costs and persistent domestic price pressures is creating a difficult environment for the central bank. The BOJ has spent years trying to move Japan away from its long period of deflation and toward a more sustainable level of inflation. However, policymakers now have to balance the benefits of higher prices and wages against the risk that inflation could become too persistent.

The latest data are strengthening expectations that the BOJ could raise its policy rate at its September meeting. Markets are increasingly pricing in the possibility of another increase from the current 1% level to 1.25%, although the timing remains dependent on economic conditions and future inflation data.

The BOJ kept interest rates unchanged at its most recent policy meeting but adopted a more cautious approach to future decisions. Officials have acknowledged that inflation could exceed earlier expectations, particularly if energy and commodity prices remain elevated.

The situation is also being closely watched by international investors. Japan is a major global financial market, and changes in BOJ policy can influence the yen, government bond yields, stock markets and international capital flows. A higher Japanese interest rate could make yen-denominated assets more attractive while also affecting investors who have historically borrowed in yen to invest in higher-yielding markets elsewhere.

For Japanese households and businesses, higher interest rates could eventually increase borrowing costs. Mortgage rates, business loans and other forms of credit could become more expensive if the BOJ continues tightening monetary policy. At the same time, a stronger yen resulting from higher rates could reduce the cost of imported energy, food and manufactured goods.

The housing market could face a particularly complicated environment. Higher borrowing costs could discourage some prospective buyers and slow housing investment, while lower import costs could eventually reduce pressure on construction materials and other products used by builders.

Japan's inflation outlook is also being influenced by broader global developments. Energy prices remain sensitive to geopolitical tensions, particularly the continuing instability surrounding the Middle East and the Strait of Hormuz. Any prolonged disruption to global energy supplies could place additional pressure on Japan, which relies heavily on imported fuel.

The BOJ therefore faces a difficult decision heading into the second half of the year. Moving too quickly could weaken consumer spending and economic growth, while waiting too long could allow inflationary pressures to become more deeply embedded.

For now, the 7.2% increase in wholesale prices gives policymakers another reason to remain cautious about inflation. Investors will be watching upcoming consumer-price data, wage trends, currency movements and energy costs for clues about whether the BOJ will deliver another rate increase in September.

Japan's latest inflation numbers ultimately highlight a broader challenge facing central banks around the world: geopolitical tensions, energy costs and currency movements are making it increasingly difficult to separate temporary price shocks from longer-lasting inflation.