Japan's Service Inflation Hits Two-Year High Amid BOJ Rate Hikes

Japan's service-sector inflation reached its highest point in over two years, reaching 3.7% in August. This development has strengthened expectations that the Bank of Japan (BOJ) will continue to raise interest rates to tackle inflation.

The Services Producer Price Index (SPPI), which measures prices companies charge each other for services, rose from 3.6% in July to 3.7% in August, according to data released by the BOJ on Monday.

The increase was driven by higher freight, advertising, and rental lease fees, indicating broader price pressures in Japan's economy.

Following this news, the BOJ recently increased its key interest rate to 1.25%, the highest since 1995, to adjust monetary policy as inflation and wage pressures remain elevated.