The reading supports the view that the Bank of Japan has room to keep tightening after this month’s hike, which tends to keep upward pressure on JGB yields and can offer the yen some support if traders bring forward rate expectations. It also arrives against minutes from the July meeting in which one member said hikes could come faster than the roughly six-monthly pace markets have priced. That combination keeps attention on the next inflation prints and on BOJ communication. Traders may also focus on how much of the headline strength comes from international shipping rather than a broader lift in domestic services.
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Earlier:
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Japan’s corporate services prices are climbing at their fastest rate in over two years, though much of the August push came from ocean freight and leasing rather than a broad-based lift.
Summary:
- Japan’s services producer price index rose 3.7% in August from a year earlier, after 3.6% in July, the fastest annual pace since June 2024, Reuters reported.
- Reuters said the gain reflected higher freight, advertising and rental and leasing fees, and the BOJ watches the gauge for signs that firms are passing on labour costs.
- BOJ tables show transport and postal services contributed around 1.1 percentage points of the annual gain, other services around 1 point and leasing and rental around 0.8 points.
- Excluding international transportation, the index rose 3.2% in August, unchanged from July, while ocean freight prices were up around 74% on the year.
- The monthly rise was 0.3% for the headline index and 0.2% excluding international transportation.
- The BOJ raised its policy rate to 1.25% this month, a 31-year high, and its governor signalled readiness to lift borrowing costs further, according to Reuters.
Japan’s services producer price index rose 3.7% in August from a year earlier, its fastest annual pace in more than two years, Bank of Japan data showed on Monday, according to Reuters. The reading followed a 3.6% gain in July and was the strongest since June 2024, adding to signs of price pressure that Reuters said will keep the central bank on course for further interest rate hikes.
The index tracks prices that companies charge one another for services, and the BOJ watches it closely for evidence of how far firms are passing higher labour costs into service prices. Reuters reported that the August increase reflected higher freight, advertising and rental and leasing fees. The BOJ’s detailed tables show the transport and postal group made the largest contribution to the annual gain, at around 1.1 percentage points, followed by other services at around 1 point and leasing and rental at around 0.8 points. Ocean freight prices were up around 74% from a year earlier, and leasing prices were up around 21%.
The detail also shows how much of the headline came from international shipping. Excluding international transportation, which covers ocean freight and international air and mail services, the index rose 3.2% in August, unchanged from July. The monthly rise for that measure was 0.2%, compared with 0.3% for the headline. Advertising was mixed: the wider advertising group was still down around 0.3% on the year, though that was an improvement from a fall of around 2% in July, helped by internet, newspaper and magazine advertising, while television and radio advertising was down around 7%. Hotel prices rose around 2% on the year, after around 6% in July.
The figures follow the BOJ’s decision this month to raise its policy rate to 1.25%, a 31-year high, and the governor’s signal that the bank is ready to push borrowing costs higher to stop inflation overshooting its target, Reuters reported. Minutes of the BOJ’s July meeting, released on Monday morning, showed board members judged risks to prices to be skewed to the upside. One member said the pace of rate hikes could turn out faster than markets expect, and another noted that services producer prices had recently been running above 3%.
This article was written by Eamonn Sheridan at investinglive.com.