MNI BRIEF: Japan Aug Services PPI Rises 2.7%, Flat Over July
MNI (TOKYO) - Japan’s services producer price index rose 2.7% y/y in August, unchanged from July’s revised 2.7%, showing that corporate pass-through of cost increases remained solid but the pace is slowing, preliminary data released by the Bank of Japan on Wednesday showed.
The August index was boosted by other services (+3.7% vs. +3.7%), including employment (+3.0% vs. +2.1%), although transpiration and postal activities (+2.2% vs. +2.7%) weighed.
The index of services with high labour cost ratio rose 2.8% y/y in August, unchanged from 2.8% in July, while the index of services with a low labour cost ratio rose 2.4% y/y in August, slowing from 2.7% in July.
The data showed that firms are raising wages to ensure necessary workers on the back of continued labour shortages and they are transferring higher labour costs to retail prices.
BOJ officials are focused on corporate price-setting, particularly services, ahead of October when many businesses are set to revise their retail prices to examine the strength of the wage-price virtuous cycle. (See MNI POLICY: BOJ Hikes To Weather Weaker Consumption)
The SPPI rose 0.1% m/m in August, slowing from July’s 0.3%.