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2026-05-27 08:25:43
[Japan's service sector inflation rises to 3.0%, reinforcing expectations of central bank rate hikes] (1) Data released on Wednesday showed that Japan's key service sector inflation indicator rose 3.0% year-on-year in April, confirming the central bank's view that a tight labor market is prompting companies to pass on rising costs to consumers. (2) The Bank of Japan emphasized that for further rate hikes, inflation must be driven by sustained increases in wages and service prices (to reach the 2% target), rather than relying on rising raw material costs. Currently, the consumer inflation rate has exceeded 2% for nearly four consecutive years. (3) Bank of Japan data also showed that the service sector producer price index, which tracks inter-company service prices, continued to climb, with the March data revised to a 3.3% increase. (4) The Bank of Japan has ended its 10-year massive stimulus program in 2024 and raised short-term interest rates to 0.75% last December, believing that Japan is close to sustainably achieving its 2% inflation target. (5) The central bank has hinted that it is prepared to raise interest rates further if prices continue to rise steadily and wages increase.
