Japanese Service Sector Inflation Hits Two-Year High Amid BOJ Rate Hikes
Japan's service sector inflation has reached its highest level in over two years, prompting expectations that the Bank of Japan (BOJ) will continue to raise interest rates. According to data released by the BOJ, the Services Producer Price Index (SPPI), which measures the prices companies charge each other for services, rose 3.7 per cent year-on-year in August.
The increase was driven by higher freight, advertising and rental lease fees, indicating broader price pressures in Japan's economy. The latest data comes after the BOJ raised its key interest rate by 25 basis points to 1.25 per cent from 1 per cent earlier in September.
The BOJ has warned that underlying inflation could exceed its 2 per cent target amid rising wage and price expectations. The central bank's policy board voted 7-2 in favor of the rate hike, which took Japan's policy rate to its highest level since 1995.