MNI BRIEF: Japan April Services PPI Rises 2.8% Vs. March's 2.3%

Japan's services producer price index rose 2.8% y/y in April, marking the 38th straight rise and accelerating from March's 2.4%, showing that businesses continue to revise retail prices, preliminary data released by the Bank of Japan on Tuesday showed.

April’s y/y rise was driven by higher transportation and postal activities (+3.4% in April vs. +2.5% in March) and machinery repair maintenance (+5.5% vs. +2.6%) and training and development services (+6.7% vs. +0.8%).

The data showed that firms that raised wages transferred high labour costs to prices and Japanese firms revise their prices every April and October.

The BOJ is focused on whether smaller firms will implement wage hikes as planned and how this impacts consumption and services prices in or after April, when firms revise their prices. BOJ officials do not expect private consumption to derail from a moderate recovery path on wage-hike hopes, but they are worried about slower consumption as households’ savings amid high prices are observed. (See MNI POLICY: BOJ Sees Risk of Earlier Inflation Rebound)

The SPPI rose 0.7% m/m in April after rising 0.9% in March.