TOKYO – Economic data released Wednesday revealed that Japan’s service sector pricing maintained steady growth at 2.6% year-over-year in January, matching the previous month’s performance and indicating that wage increases from a constrained labor market are continuing to fuel inflationary pressures throughout the nation’s economy.
The services producer price index, which measures what businesses charge one another for various services, showed identical growth rates for both December and January, according to information from the Bank of Japan.
Construction services and temporary staffing agencies were the primary drivers behind the price increases, the data indicated.
Japan’s central bank concluded its decade-long massive economic stimulus program last year and subsequently increased short-term borrowing rates to 0.75% in December, based on assessments that the country was approaching sustainable achievement of its 2% inflation goal.
Given that consumer price inflation has remained above 2% for almost four years running, monetary policy officials have indicated their willingness to continue raising interest rates if price growth persists alongside corresponding wage increases.
Central bank chief Kazuo Ueda has stated that monetary authorities will closely monitor whether expectations of consistent wage growth will encourage additional companies to transfer rising labor expenses to consumers, as they determine the timing for future interest rate increases.
