MNI BRIEF: Japan July Services PPI Rises 2.9% Vs. June 3.2%

Japan’s services producer price index rose 2.9% y/y in July, slowing from June’s unrevised 3.2% but still reflecting ongoing corporate pass-through of higher costs, preliminary Bank of Japan data showed Tuesday.

The slowdown was led by weaker gains in hotels (3.3% vs 4.1%) and advertising services (1.3% vs 2.0%). On a monthly basis, the SPPI rose 0.3% after a 0.2% decline in June.

Prices in services with high labour cost ratios climbed 3.7% y/y, unchanged from June, while those with low labour cost ratios rose 1.9% after 2.7% in June.

BOJ officials noted services prices continue to rise as companies pass on higher material and labour costs, but momentum is waning. They are watching whether sustained high prices will erode private consumption. (See MNI BOJ WATCH: Ueda Says To Gradually Raise Rates)