Japan’s services producer prices rose 3.3% year-on-year in May, underscoring persistent inflationary pressures and reinforcing market expectations that the Bank of Japan could continue raising interest rates.
Data released by the central bank showed the Services Producer Price Index, which measures prices companies charge one another for services, matched April’s revised annual increase of 3.3%.
The steady rise reflected higher transportation costs, with ocean freight charges surging 61.8% from a year earlier while international air passenger transportation prices climbed 17.3%.
The increases were largely attributed to higher fuel costs linked to recent tensions in the Middle East, which have raised operating expenses across global transport networks.
The latest figures suggest inflationary pressures are becoming more entrenched beyond consumer goods, extending into the services sector and adding to the case for further monetary policy normalisation.
Markets have been closely watching Japanese inflation indicators following the Bank of Japan’s decision earlier this month to raise interest rates to 1.0%, the highest level in more than three decades.
Economists said sustained increases in service-sector prices are an important gauge for policymakers because they often reflect broader wage and demand dynamics within the economy.
The data comes as investors continue to assess the impact of higher energy costs, a weaker yen and global supply chain developments on Japan’s inflation outlook. Persistent price growth in services could strengthen expectations that the central bank will keep moving interest rates closer to levels considered neutral for the economy.
Reuters
