Japan’s services producer price index rose 3.7 percent year on year in September, the Bank of Japan said on Tuesday. The reading matched August’s pace and was in line with expectations.
The figure tracks prices companies charge one another for services, a measure watched for signs that cost increases are passing through to wages and final prices.
Goods prices cool
Goods producer price inflation slowed to 6.8 percent in September from 7.6 percent in August. Government fuel subsidies helped ease cost pressure on the goods side.
The divergence leaves services prices running hotter than goods, a pattern that keeps attention on domestic demand rather than imported costs.
Policy outlook ahead of the October meeting
The BoJ raised its policy rate in September, and the two board members who opposed that hike could dissent again in favour of a cut. The policy rate is 1.25 percent, and the bank is expected to hold it at its October 29-30 meeting.
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Governor Kazuo Ueda said last week, after a G20 meeting, that underlying inflation was broadly close to 2 percent and that the bank could not tolerate a further rise. The bank’s Outlook Report is expected to address whether underlying inflation has reached its 2 percent target, which it has never declared since adopting the goal in 2013.
The Federal Reserve’s decision is due on Wednesday.
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Source: Bank of Japan
