MNI BRIEF: Japan Oct Services PPI Rises 2.7% Vs. Sept +3.1%

Japan’s services producer price index rose 2.7% y/y in October, slowing from a revised 3.1% in September, indicating that corporate pass-through of cost increases continued but at a moderating pace, preliminary Bank of Japan data showed Wednesday.

The October reading was weighed down by transportation and postal services (2.0% vs 3.6%) and advertising services (-0.4% vs 2.7%), while gains in other categories, including hotels (18.1% vs 11.1%), provided support.

On a monthly basis, the SPPI rose 0.6% in October after a 0.1% increase in September.

Prices for services with a high labour cost ratio rose 3.0% y/y in October, easing from 3.4% in September, while those with a low labour cost ratio increased 2.4% y/y, unchanged from the prior month.

BOJ officials judge that services prices continue to rise as firms pass higher labour and distribution costs through to selling prices, but the pace remains insufficient to achieve the 2% inflation target in a stable and sustainable manner.