FILE PHOTO: Pedestrians are silhouetted on a connecting bridge between shopping malls in Tokyo, Japan December 26, 2017. REUTERS/Kim Kyung-Hoon/File Photo
TOKYO — Japan’s business-to-business service inflation was steady at 2.3% in November, data showed on Tuesday, suggesting companies were gradually passing on rising labor costs amid prospects for sustained wage gains.
The data underscores the Bank of Japan’s (BOJ) view that rising service prices will start to replace cost-push inflation as a key driver of price gains, and help achieve its 2% inflation target on a sustainable basis.
The year-on-year rise in the services producer price index, which measures what companies charge each other for services, was unchanged from October and higher than a 2.0% gain in September, BOJ data showed.
BOJ Governor Kazuo Ueda said on Monday the likelihood of achieving the central bank’s 2% inflation target was “gradually rising”, and that next year’s wage outlook was key to the timing of an exit from ultra-loose monetary policy.
He has repeatedly stressed the need for wages to keep rising, heightening market attention to developments in service prices, which reflect the wage pressures companies face.