Japan’s corporate service inflation hits 9-year high
2024.07.24 21:09
By Leika Kihara
TOKYO (Reuters) – The price Japanese companies charge each other for services rose 3.0% in June from a year earlier, data showed on Thursday, the fastest pace in more than nine years in a sign of heightening inflationary pressures.
The data comes ahead of the BOJ’s two-day policy meeting that ends on Wednesday, when the board is likely to debate whether to raise interest rates and lay out a plan to taper its huge bond buying in coming years.
Service-sector inflation is closely watched by the central bank for clues on whether prospects of rising wages are prodding firms to hike prices and leading to broader-based inflation, a prerequisite for raising interest rates.
The increase, which followed a 2.7% gain in May, was driven by higher prices for advertising, hotels and leasing, the data showed, suggesting companies were now charging more for a wide range of services.
It was the fastest year-on-year increase since March 2015.
Rising global commodity costs and the boost to import costs from a weak yen have also pushed up wholesale inflation, which rose 2.9% in June, the fastest year-on-year pace since August 2023.
The BOJ ended eight years of negative interest rates and other remnants of its massive stimulus in March, taking a landmark step toward normalising ultra-loose monetary policy.
BOJ Governor Kazuo Ueda has said the central bank will raise interest rates if it becomes more convinced that Japan was on track to durably hit its 2% inflation target.
