On November 26, 2024, data from Japan indicated that the service-sector inflation rate remained steady at approximately 3% for October. This figure is significant as it suggests that rising wages are leading more companies to increase their prices in response to higher labor costs.
The Bank of Japan (BOJ) is closely monitoring service-sector inflation as it seeks to determine whether price increases driven by demand are substantial enough to warrant further interest rate hikes. The year-on-year increase in the services producer price index accelerated from 2.8% in September to 3% in October, according to BOJ data.
The BOJ, which ended its negative interest rate policy in March, raised its short-term policy rate to 0.25% in July, citing steady progress towards achieving its 2% inflation target. BOJ Governor Kazuo Ueda has indicated that the central bank will continue to raise rates if inflation remains on track to meet this target, as projected.
In a recent poll, just over half of the economists surveyed by Reuters anticipate that the BOJ will implement another interest rate increase at its upcoming policy meeting in December.