Japan Service Inflation Hits Two-Year High Amid Broadening Price Pressures

A key measure of Japan's service-sector inflation has reached its highest level in over two years. The services producer price index, which tracks prices that companies charge each other for services, rose 3.7% in August from a year earlier, according to data from the Bank of Japan.

This increase is the fastest annual pace since June 2024 and reflects rising freight, advertising, and rental lease fees. The data is closely watched by the BOJ for clues on how companies are passing on labor costs to service-related prices.

The BOJ raised interest rates to a 31-year high of 1.25% this month and its governor signaled readiness to push up borrowing costs further to prevent inflation from overshooting its target.