Japan’s corporate services inflation hits 2-year high

TOKYO - Japan's service-sector inflation surged in August at the quickest annual pace in over two years, according to data released on Monday, indicating mounting cost pressures that will likely prompt the central bank to continue raising interest rates. The services producer price index, which measures the prices that businesses charge each other for services, surged 3.7% in August compared to a year ago, following a 3.6% increase in July.

This marked the fastest annual pace since June 2024, signaling a widening inflationary trend. The rise was primarily driven by higher freight, advertising, and rental lease fees, reflecting broader inflationary pressures. The Bank of Japan closely monitors this data to gauge how companies are passing on increased labor costs to service-related prices.

Earlier this month, the BOJ hiked interest rates to a 31-year peak of 1.25%, and its governor hinted at further hikes to curb inflation from straying beyond its target.