Japans modest business services price rise highlights dilemma for...

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Japan's business-to-business services prices rose 1.6% in January from a year earlier, much slower than a 9.5% jump in wholesale goods prices, a sign the recent pick-up in inflation is driven largely by cost-push factors rather than higher wages.

The data highlights the dilemma faced by the Bank of Japan (BOJ) as tame wage growth weighs on consumption and the broader economy, forcing the central bank to hold off raising interest rates even as inflation well exceeds its 2% target.

The year-on-year rise in the services producer price index, which measures the price companies charge each other for services, followed a 1.5% increase in December. It marked the 23th straight month of increase, BOJ data showed on Wednesday.

Japan's economy averted recession but rebounded much less than expected in the fourth quarter as business investment slumped, underscoring the fragile nature of the country's delayed recovery from the COVID-19 pandemic.

While real wages rose in December for the first time in nine months due to temporary bonus payments, household spending slid 1.3% year-on-year that month in a sign of the pain consumers are feeling from the rising cost of living.

Japan's core consumer inflation hit 4.0% in December, double the central bank's 2% target, as companies continued to pass on rising energy and raw material costs to households.

Japan's modest business services price rise highlights dilemma for central bank

Japan's business-to-business services prices rose 1.6% in January from a year earlier, much slower than a 9.5% jump in wholesale goods prices, a sign the recent pick-up in inflation is driven largely by cost-push factors rather than higher wages.

Japan

Japanese

Business

Services

Price

Central Bank