TOKYO (Reuters) – Japan’s annual business-to-business service inflation hit 2.4% in December to match the previous month’s nearly nine-year high, data showed, suggesting companies were gradually passing on rising labour costs amid prospects for sustained wage gains.
The data underscores the Bank of Japan’s (BOJ) view that rising service prices will start to replace cost-push inflation as a key driver of price gains, and help achieve its 2% inflation target on a sustainable basis.
The year-on-year rise in the services producer price index, which measures what companies charge each other for services, was steady from a revised 2.4% rise in November, BOJ data showed on Friday. The November increase was the fastest pace of rise since March 2015.
Service price moves are closely watched by the BOJ as a key indicator of whether wages and inflation are beginning to rise in tandem, which it set as among prerequisites for phasing out its massive monetary stimulus.
(Reporting by Leika Kihara; Editing by Chris Reese)