MNI BRIEF: Japan Jan Services PPI Rises 2.1% Vs. Dec +2.4%

Japan's services produce price index rose 2.1% y/y in January, marking the 35th straight rise but slowing from December's 2.4%, showing that the pass-through of cost increases to services prices is slowing, preliminary data released by the Bank of Japan on Monday showed.

January’s y/y slowdown was driven mainly other by services, such as hotel fees (+27.0% in January vs. +56.6% in December), although the Bank of Japan observed pass-through of high labour costs to prices, an official said.

The Bank's focus will turn to whether high services prices will lead to wage hikes in non-manufacturers and corporate annual price revision expected in April. Wages growth represents a key factor for the BOJ board over the next two meetings. (See MNI INTERVIEW: March Action Chance Rises - Ex-BOJ Sakurai)

The SPPI fell 0.5% from the previous month in January after rising 0.1% in December, marking the first y/y drop since June 2023.