Japan’s service inflation accelerates:
- Japan September Services Producer Price Index +3% y/y (expected +2.7%, prior +2.7%)
- Preview - BOJ expected to hold rates as Takaichi’s fiscal tilt and U.S. risks weigh
A key gauge of Japan’s service-sector inflation rose for the second consecutive month in September, reinforcing the Bank of Japan’s (BOJ) confidence that rising labour costs will help keep inflation near its 2% target.
Data from the BOJ showed the services producer price index, which measures prices charged between companies for services, climbed 3.0% year-on-year, up from 2.7% in August.
- increase driven by price gains in labour-intensive sectors such as hotels and construction
- points to persistent staff shortages and rising wage pressures.
This data has hit just ahead of the BOJ’s two-day policy meeting ending Thursday
- BOJ policymakers are widely expected to hold short-term interest rates at 0.5%
- the BOJ ended its decade-long stimulus programme last year
The Bank delivered its first rate hike in January, signalling growing confidence that inflation is now self-sustaining
- consumer inflation has remained above 2% for more than three years
- the BOJ has said it is prepared to gradually raise borrowing costs further if wage growth continues to support stable price gains.
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The data keeps the door open to gradual hikes. Persistent service-sector inflation may keep upward pressure on the yen and Japanese bond yields.
USD/JPY meanwhile is around 152.98, tracking a small range only so far today.
