MNI BRIEF: Japan Oct Services PPI Rises 2.3% Vs. Sept's 2.0%

Japan's services producer price index rose 2.3% y/y in October, marking the 32nd straight rise and accelerating from September's revised 2.0%, showing that pass-through of cost increases continued in services, preliminary data released by the Bank of Japan on Monday showed.

The Bank of Japan will focus on whether high services prices will lead to wage hikes in non-manufacturers.

The SPPI rose 0.5% m/m in October after being unchanged in September.

The October rise was due mainly to higher prices for advertising services (+2.9% in October vs. +0.2% in September) and transportation and postal services (+1.3% vs. +0.6%).

BOJ officials don’t expect private consumption to derail from a moderate recovery path immediately but they are worried about slower consumption as households’ savings and price cuts in supermarkets are observed.

Private consumption fell 0.04% q/q in the third quarter for the second straight quarterly drop following -0.9% in the second quarter.

BOJ officials are paying great attention to the outlook for the consumption and capital investment as domestic driving factors.