Japan's Service Sector Inflation Hits 2-Year High as Interest Rate Hikes Loom

Japan's service sector inflation is rising at its fastest pace in over two years. According to data released by the Bank of Japan, the services producer price index rose 3.7% in August from a year earlier after a 3.6% gain in July.

The increase in August reflects broadening inflationary pressure, with rising freight, advertising, and rental lease fees contributing to the growth. The data is closely watched by the Bank of Japan for clues on how companies are passing on rising 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 the bank's readiness to push up borrowing costs further to prevent inflation from overshooting its target.