Economic news

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.

© Reuters. FILE PHOTO: A man holding an umbrella crosses a street at a business district in Tokyo February 26, 2015. Japan Inc is under pressure to boost pay to keep a fragile economic recovery afloat, but even hefty wages increases from the biggest companies may prove to be a hollow victory for Prime Minister Shinzo Abe and the bulk of the country's workers. REUTERS/Yuya Shino/File Photo

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.



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