Japan’s corporate services inflation accelerates in July

[TOKYO] A key gauge of Japan’s service-sector inflation rose 3.6 per cent in July from a year earlier, data showed on Wednesday (Aug 26), reinforcing the central bank’s view that a tight labour market is pushing firms to pass rising costs on to consumers.

The increase in the services producer price index, which tracks the prices companies charge each other for services, followed a revised 3.4 per cent gain in June, Bank of Japan data showed.

The data added to signs of broadening inflationary pressure in the economy that have bolstered the case for a near-term interest rate hike.

Japan’s core consumer inflation accelerated in July from a year earlier as firms passed on rising import costs from a weak yen and the US-Israeli war with Iran.

Sources have told Reuters the BOJ is set to raise the rate as soon as September and is considering hiking more aggressively thereafter from the current pace of roughly two times a year. REUTERS