Corporate goods prices jumped again in May, signaling strengthening inflationary pressures rippling across domestic supply chains as the war in Iran drags on and keeps energy prices elevated.

The measure of input prices for Japanese firms rose 0.9% from a month earlier, and April’s increase was revised higher, the Bank of Japan reported Wednesday. On an annual basis, prices climbed the most in three years — above most estimates in a Bloomberg survey of economists and also following an upward revision to the prior month.

“Higher import prices upstream are already feeding through to domestic producer prices,” said Masayuki Sato, an economist at NLI Research Institute. “I think the pace of increase in producer prices is likely to accelerate going forward.”

Sato said Wednesday’s data strengthen the case for the BOJ to move ahead with rate hikes sooner rather than later, while emphasizing the need to assess the impact of each adjustment.

The report underscores continued pressure on corporate margins arising from higher costs for raw materials and energy as the Middle East conflict shows no signs of abating.

Oil prices rose Wednesday after the U.S. launched fresh strikes against Iran following the downing of an American helicopter.

Should such inflationary pressures persist, the trend may keep the BOJ raising interest rates beyond a widely expected hike next week.

The rising producer price index reflects a growing willingness from suppliers to pass on rising operating costs to their corporate customers, an indication that inflationary expectations are taking root.

The gain in goods prices was led by higher commodity costs, including petroleum and coal products, electric power and gas as well as chemicals. That’s at the heart of Prime Minister Sanae Takaichi’s extra budget to continue subsidies for households to cushion expenses stemming from the Middle East conflict.

Data earlier Wednesday showed that Japan’s small firms increasingly expect the impact of the Iran war to affect future wage talks, underscoring how companies may have trouble sustaining pay gains as the war drives up input costs and squeezes profit margins.