Japan's corporate services inflation hits 2-year high

TOKYO, September 28 - Inflation within Japan's corporate services sector surged to its highest level in two years in August, signaling persistent price pressures, according to data released on Monday. The Services Producer Price Index, which monitors the costs that businesses transfer to one another for services, surged by 3.7% year-on-year in August, up from a 3.6% increase in July, according to the Bank of Japan.

This uptick marked the quickest rate since June 2024 and indicated growing inflationary pressures, primarily driven by surging freight, advertising, and rental lease fees. The BOJ closely monitors this metric to gauge how companies are responding to the rising labor costs by adjusting service-related prices. Earlier this month, the central bank increased interest rates to a 31-year peak of 1.25% and its governor indicated readiness to further elevate borrowing costs to curb inflation from exceeding its target.