Japan Jan. services producer prices rise 2.6% (YY: est. +2.6%)

Japan Jan. services producer prices rise 2.6% (YY: est. +2.6%)

Japan’s Services Producer Prices Rise 2.6% Year-on-Year, Reflecting Persistent Labor Market Pressures

Japan’s services producer price index (PPI), a key indicator of inflationary trends in the sector, increased by 2.6% year-on-year in December 2026, aligning with expectations and following a 2.7% rise in November, according to data released by the Bank of Japan (BOJ). The latest figures highlight ongoing cost pressures driven by labor shortages, particularly in labor-intensive industries such as hospitality and construction, where companies continue to pass on higher wages to prices.

The BOJ has noted that a tightening labor market remains a critical driver of wage growth and services-sector inflation. This aligns with broader signs of inflationary momentum, as consumer prices have exceeded the central bank’s 2% target for nearly four years. In December 2024, the BOJ concluded a decade-long stimulus program and raised its short-term interest rate to 0.75%, signaling confidence that Japan is nearing sustained compliance with its inflation goal.

Governor Kazuo Ueda emphasized in recent remarks that the central bank will closely monitor whether persistent wage gains translate into further price increases, which could necessitate additional rate hikes. The BOJ also highlighted the growing influence of a weak yen on inflation, not only through elevated import costs but also via indirect effects, such as labor cost pass-through.

With services PPI inflation remaining steady, market participants may anticipate continued vigilance from the BOJ in balancing inflation control with support for economic growth. The data reinforce expectations that monetary policy will remain restrictive in the near term, pending further evidence of inflationary durability.

Source: https://wtaq.com/2026/01/26/japans-leading-indicator-of-service-inflation-hits-2-6-in-december/

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