Japan corporate services inflation hits 3.7% in August, fastest in two years

Japan's services producer price index rose 3.7% in August from a year earlier, the fastest annual pace since June 2024. The increase, driven by freight, advertising and rental lease fees, keeps the Bank of Japan on track for further rate hikes after it raised rates to 1.25% this month.

TOKYO — A key gauge of Japan's service-sector inflation rose in August at the fastest annual pace in more than two years, data showed on Monday, highlighting mounting price pressures that will keep the central bank on track for further interest rate hikes.

The services producer price index, which tracks the prices that companies charge each other for services, rose 3.7 per cent in August from a year earlier after a 3.6 per cent gain in July, data from the Bank of Japan showed.

The increase in August, which was the fastest year-on-year pace since June 2024, reflected rising freight, advertising and rental lease fees, in a sign of broadening inflationary pressure, the data showed.

The data is closely watched by the BOJ for clues on the extent to which companies are passing on rising labour costs to service-related prices.

The BOJ raised interest rates to a 31-year high of 1.25 per cent this month and its governor signalled the bank's readiness to push up borrowing costs further to prevent inflation from overshooting its target.