TOKYO, March 26 (Reuters) – A key gauge of Japan’s service-sector inflation rose 2.7% in February from a \u200byear earlier, data showed on Thursday, reinforcing the \u200ccentral bank’s view that a tight labour market is pushing firms to pass rising costs on to consumers.<\/p>\n
The \u200bBank of Japan has stressed the need \u200bto see inflation durably hit its 2% \u2060target driven by rising wages and services \u200bprices, rather than higher raw material costs, to proceed \u200bwith further interest rate hikes.<\/p>\n
Sign up here.<\/a><\/p>\n The increase in the services producer price index, which tracks the price companies charge each \u200bother for services, followed a 2.6% gain \u200bin January, BOJ data showed.<\/p>\n Prices rose for labour-intensive industries such \u200cas \u2060hotel and construction work, the data showed, a sign labour shortages were pushing up wages and service-sector inflation.<\/p>\n The BOJ ended a decade-long, massive stimulus \u200bprogramme in 2024 \u200band in \u2060December raised short-term interest rates to 0.75% on the view Japan was \u200bon the cusp of durably meeting \u200bits \u20602% inflation target.<\/p>\n With consumer inflation having exceeded its 2% target for nearly four years, the central bank \u2060has \u200bsignaled its readiness to keep \u200bhiking borrowing costs if prices continue to rise steadily accompanied \u200bby higher wages.<\/p>\n Reporting by Leika Kihara Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n
\nEditing by Shri Navaratnam<\/p>\n