BOJ Data Supports Interest Rate Hike: Japan's Service Sector Inflation Accelerates

The services producer price index in Japan rose 3.6% in July from a year earlier, according to Bank of Japan data released on Wednesday.

This increase follows a revised 3.4% gain in June and indicates that the central bank's view is correct - that a tight labor market is pushing firms to pass rising costs on to consumers.

The inflationary pressure is broadening, with core consumer inflation accelerating in July as well. Firms are passing on rising import costs due to the weak yen and the US-Israeli war with Iran.