Japan's corporate services inflation hits 2-year high

Japan's corporate services inflation reached a two-year peak in August, according to data released by the Bank of Japan, indicating growing price pressures that will likely prompt further interest rate hikes. The services producer price index, which measures the prices companies charge each other for services, surged 3.7% year-on-year in August, up from 3.6% in July, the latest data showed.

The sharp increase, the fastest since June 2024, was driven by rising costs for freight, advertising, and rental lease fees, signaling broader inflationary pressures. The data is closely monitored by the BOJ as a gauge of how companies are responding to higher labor costs by adjusting service-related prices. The BOJ recently raised interest rates to a 31-year high of 1.25% and its governor hinted at further rate increases to curb inflation from exceeding its target.