Japan’s services producer price index, which tracks prices companies charge each other for services, increased 3.6% in July from a year earlier, accelerating from a revised 3.4% gain in June.
The pickup in corporate services inflation follows broader price pressures in the economy, with core consumer inflation also accelerating in July. Analysts noted that a tight labor market has prompted firms to pass rising costs to clients, while import costs have climbed due to a weaker yen and geopolitical disruptions, including the U.S.-Israeli conflict with Iran.
The broadening inflationary trend has strengthened expectations that the Bank of Japan (BOJ) will raise interest rates as soon as September. Sources cited by Reuters indicated the central bank may adopt a more aggressive hiking cycle than its current pace of roughly two increases per year, though no formal decision has been announced.
The July data, released on August 26, underscores the challenges facing policymakers as they balance inflation control with economic growth amid persistent cost pressures.
