Japan’s service prices rise for 8th straight month as freight cost spikes
TOKYO (Reuters) – The prices Japanese companies charge each other for services rose 1.0% in October from a year earlier, their eighth straight month of gains and a sign inflationary pressure was building due to higher global commodity costs.
The services producer price index hit 105.4 in October, the highest since November 2001, Bank of Japan (BOJ) data showed on Thursday.
But the gain was far smaller than an 8.0% spike in wholesale goods inflation in October, suggesting slow wage growth will moderate any rise in consumer prices.
The key driver behind the October services price rise was transportation fees, as robust global demand for raw materials allowed shipping firms to pass on higher fuel costs to clients.
The cost of ocean freight transportation spiked 52.0% in October from a year earlier after a 34.9% gain in September, the data showed.
The pace of declines in hotel fees slowed to 2.9% in October from 7.4% in September, a sign consumption was picking up after the Sept. 30 lifting of curbs to combat the COVID-19 pandemic.
“Corporate services prices are recovering gradually, with some sectors showing demand picking up due to the lifting of curbs. But the move hasn’t broadened much on lingering caution over the pandemic,” Shigeru Shimizu, head of the BOJ’s price statistics division, told a briefing.
Japan’s economy has lagged other advanced nations in recovering from pandemic doldrums, discouraging firms from passing on higher raw material costs to consumers.
Core consumer prices rose just 0.1% in October from a year earlier, even as fuel costs accelerated at the fastest pace in more than a decade.
(Reporting by Leika Kihara; Editing by Sam Holmes)