Japan's corporate service inflation perks up in February

TOKYO, March 26 (Reuters) - ‌A key ​gauge ​of Japan's service-sector inflation rose 2.7% in February from a year earlier, data ‌showed on Thursday, reinforcing the central bank's ⁠view that a tight labour market is pushing firms to ‌pass rising costs on ‌to consumers.

The Bank of Japan has stressed the need to see inflation durably hit its ​2% target driven by rising wages and services prices, rather than higher raw material costs, ⁠to proceed with further interest rate hikes.

The increase in the services ​producer price index, which tracks the price companies charge each other for services, ​followed a 2.6% gain in ‌January, BOJ data showed.

Prices rose for labour-intensive industries such as hotel and construction ⁠work, the data showed, a sign labour shortages were pushing up wages and service-sector inflation.

The BOJ ended ⁠a decade-long, massive stimulus programme in 2024 and in December ​raised short-term interest rates to 0.75% on the view Japan was on the cusp of durably meeting its ‌2% inflation target.

With consumer inflation having exceeded its 2% target for nearly four ‌years, the central bank has signaled its readiness ⁠to keep hiking ‌borrowing costs if ​prices continue to rise steadily accompanied by higher wages.

(Reporting by Leika KiharaEditing by Shri ‌Navaratnam)

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