Japan's Corporate Service Inflation Perks up in August

Source Credit : Reuters

A leading indicator of Japan's service-sector inflation perked up in August, data showed on Thursday, backing up the central bank's view that rising labour costs will help keep inflation sustainably around its 2% target.

The services producer price index, which tracks the price companies charge each other for services, rose 2.7% in August from a year earlier, Bank of Japan data showed, accelerating from a revised 2.6% gain in July.

Hotel prices rose 7.6% year-on-year in August, accelerating from a 5.4% gain in July, reflecting solid demand from inbound tourism, the data showed.

The BOJ ended a decade-long, massive stimulus programme last year and in January raised short-term interest rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target.

With consumer inflation exceeding 2% for well over three years, the central bank has signaled its readiness to keep hiking borrowing costs further if the economy sustains a moderate recovery.

A key indicator for Japan's service-sector inflation increased in August, reinforcing the Bank of Japan's view that inflation around its 2% target will remain sustainable due to rising labor costs. The Services Producer Price Index (SPPI) rose 2.7% year-on-year in August, an acceleration from July, with a significant increase in hotel prices driven by international tourism.