Japan's leading indicator of service inflation hits 2.6% in December
TOKYO, Jan 27 : A leading indicator of Japan's services sector prices rose 2.6 per cent in December from a year earlier, data showed on Tuesday, a sign labour shortages continue to prod companies to pass on rising costs.
The increase in the services producer price index, which tracks the price companies charge each other for services, followed a 2.7 per cent gain in November, Bank of Japan data showed.
Prices rose for labour-intensive industries such as hotel and construction work, the data showed, underscoring the central bank's view a tight job market will keep pushing up wages and service-sector inflation.
The BOJ ended a decade-long, massive stimulus programme in 2024 and in December raised short-term interest rates to 0.75 per cent on the view Japan was on the cusp of durably meeting its 2 per cent inflation target.
With consumer inflation exceeding 2 per cent for nearly four years, the central bank has signaled its readiness to keep hiking borrowing costs if prices continue to rise steadily accompanied by higher wages.
BOJ Governor Kazuo Ueda said on Friday the central bank would keep a close eye on whether prospects of steady wage gains will prod more companies to pass on rising labour costs, in judging how soon to hike interest rates again.
In an analysis released on Tuesday, the BOJ said a weak yen has an increasing impact on Japan's inflation not just through higher import costs but through second-round effects such as the pass-through of labour costs.
