Japan's Service-Sector Inflation Accelerates, Fueling Rate Hike Bets

Japan's corporate services inflation accelerated in July, with a key gauge of service-sector inflation rising 3.6% from a year earlier, according to data released by the Bank of Japan on Wednesday.

The services producer price index, which tracks the prices companies charge each other for services, saw a revised 3.4% gain in June, further reinforcing the central bank's view that a tight labor market is pushing firms to pass rising costs on to consumers.

The data adds to signs of broadening inflationary pressure in the economy, which has bolstered the case for a near-term interest rate hike by the Bank of Japan. Sources have told Reuters that the BOJ is set to raise the rate as soon as September and consider hiking more aggressively thereafter from the current pace of roughly two times a year.