TOKYO: Japanese rubber futures dropped to a two-month low on Thursday, as data showing the highest US inflation in more than 40 years raised concerns over more interest rate hikes, which could slow economic growth and curb demand.

The Osaka Exchange rubber contract for December delivery finished down 2 yen, or 0.8%, at 241.8 yen ($1.74) per kg. It hit 241.3 yen, the lowest since May 16, earlier in the session.

The rubber contract on the Shanghai futures exchange for September delivery closed down 240 yuan, or 2%, at 12,055 yuan ($1,789.08) per tonne, after dropping to its lowest level in two years earlier on Thursday.

“The central bank rate hike onslaught is explicitly targeting supply driven inflation of which commodities is at the target bulls eye,” said Stephen Innes, managing partner at SPI Asset Management. “And its unfortunately going to trigger a global slowdown.”

Asian shares were pinned at two-year lows on Thursday after white-hot US inflation data drove fears the Federal Reserve will raise interest rates even more aggressively, which boosted the safe haven dollar.

The US Federal Reserve is seen ramping up its battle with red-hot inflation with a supersized 100-basis-point rate hike this month, after a grim inflation report showed price pressures accelerating.

Fears over weak demand in top consumer China also weigh on prices amid rising fresh COVID-19 cases.

China’s import of natural and synthetic rubber increased almost 16% in June from a year earlier. The front-month rubber contract on Singapore Exchange’s SICOM.