TOKYO, Aug 26 – Japan's service-sector inflation accelerated in July, with a key gauge rising 3.6% from a year earlier, according to Bank of Japan data released on Wednesday. This increase follows a revised 3.4% gain in June and underscores the central bank's view that a tight labor market is prompting firms to pass rising costs on to consumers.
The services producer price index, which tracks prices companies charge each other for services, reflects broadening inflationary pressures in the economy. Japan's core consumer inflation also accelerated in July as firms passed on rising import costs driven by a weak yen and the ongoing U.S.-Israeli war with Iran.
Sources have informed Reuters that the Bank of Japan is expected to raise interest rates as soon as September and is considering more aggressive hikes thereafter, moving beyond the current pace of roughly two increases per year.
These developments highlight growing inflationary challenges in Japan amid external geopolitical tensions and domestic labor market constraints.
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