BOJ Corporate Services Prices Surge to 3.6% Gain in July, Boosting Rate Hike Bets

The Bank of Japan reported that corporate services prices in Japan accelerated to a 3.6% gain in July, exceeding expectations and bolstering bets for an early rate hike by the BOJ.

This marks a pickup from June's revised 3.4% gain, with the Corporate Services Price Index (2020 average = 100) coming in at 115.1.

The acceleration in services price gains is seen as evidence that the 'virtuous cycle between wages and prices' is spreading to the services sector, highlighting companies continuing to pass on higher labor costs to transaction prices due to a tight labor market.

Core consumer prices also accelerated, with the core CPI excluding special factors rising 2.3% from a year earlier, marking the 22nd consecutive month at or above 2%.