Japan corporate services inflation rises, BOJ encourages rate hike Reuters

By Leica Kihara

TOKYO (Reuters) – Inflation in Japan’s services sector rose to 3.0% in November, accelerating for a second straight month, it said on Wednesday, supporting the central bank’s view that wage hikes are pushing more companies to cut rates. expenses.

Service-sector inflation is being closely watched by the Bank of Japan, which compiled data on Wednesday to further convince demand-driven inflation is expanding enough.

November’s year-on-year gain in the services producer price index, which measures the price companies pay for services, rose 2.9 percent from October.

The index, at 109.1, marked its highest level since March 1995.

The increase in prices is due to the increase in prices for various services, from hospitality to machinery maintenance to construction.

The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view that Japan is on track to sustainably meet its 2% inflation target.

Governor Kazuo Ueda has said the BOJ will raise rates if inflation continues to hit 2 percent.

While the BOJ kept rates on hold in December, Ueda said it will examine data on next year’s wage expectations to assess how quickly it can accelerate borrowing costs.

In a Reuters poll earlier this month, all respondents expected the BOJ to raise rates to 0.50% by the end of March. The BOJ will meet on January 23-24 for a rate review, followed by another meeting on March 18-19.