MNI BRIEF: Japan June Services PPI Rises 3.2% Vs. May 3.4%

Japan’s services producer price index (SPPI) rose 3.2% y/y in June, decelerating from May’s revised 3.4%, despite the continued increase in corporate pass-through cost, preliminary data released by the Bank of Japan showed on Friday.

The deceleration was driven in part by weaker price growth in sectors such as hotels (7.5% vs 16.5%), and advertising services (1.9% vs. 3.0%).

The SPPI fell 0.1% m/m in June, unchanged from May’s -0.1%.

The index for services with a high labour cost ratio rose 3.7% year-on-year, unchanged from the previous month. Meanwhile, the index for services with a low labour cost ratio increased 2.7%, easing from 2.9% in May.

Bank of Japan officials are closely monitoring how the recent decline in rice prices may filter through to service-sector prices, though upward pressure from elevated labour and distribution costs continues to support services inflation.