By Leika Kihara
TOKYO (Reuters) – A leading indicator of Japan’s service-sector inflation held steady near 3% in October, data showed on Tuesday, reinforcing the central bank’s view that rising wages are prodding more firms to pass on higher labour costs through price hikes.
Service-sector inflation is being closely watched by the Bank of Japan for clues on whether demand-driven price gains are broadening enough to justify raising interest rates further.
The October year-on-year gain in the services producer price index, which measures the price companies charge each other for services, accelerated from a 2.8% gain in September, BOJ data showed.
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view Japan was making steady progress towards durably achieving its 2% inflation target.
Governor Kazuo Ueda has said the BOJ will keep raising rates if inflation remains on track to stably hit 2% as it projects.
Just over half of economists polled by Reuters expect the BOJ to raise interest rates again at its next policy meeting in December.
