July’s Corporate Services Price Index outpaced forecasts, bolstering expectations for a Bank of Japan rate hike in September.
Japan’s Corporate Services Price Index climbed 3.6% year-on-year in July, surpassing the 3.2% forecast and accelerating from a revised 3.4% gain in June. The index, which tracks prices firms charge each other for services, rose 0.4% month-on-month, reversing a 0.4% decline in June.
The data underscores persistent inflationary pressures, driven by a weak yen, elevated import costs, and a tight labor market. Core consumer inflation also accelerated in July, reinforcing expectations that the Bank of Japan may raise rates sooner than previously anticipated.
Economists now widely expect a September rate hike to 1.25%, with the latest figures reducing the likelihood of a surprise hold. The yen’s reaction has been muted, as markets had already priced in tightening.