By Leica Kihara
TOKYO (Reuters) – A key gauge of Japan's services sector inflation rose to 3.0% in November, accelerating for a second straight month, data showed on Wednesday, supporting the central bank's view that wage growth is prompts more firms to move higher. expenses.
Services sector inflation is being watched closely by the Bank of Japan, which compiled Wednesday's data, for clues on whether demand-driven price gains are expanding enough to justify further interest rate hikes.
November's year-over-year gain in the services producer price index, which measures the prices companies charge each other for services, accelerated from a 2.9% gain in October.
The index, at 109.1, marked its highest level since March 1995.
The increase was driven by higher prices for a range of services, ranging from accommodation, machinery repair to construction.
The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July on the view that Japan was making steady progress towards sustaining its 2% inflation target.
Governor Kazuo Ueda has said the BOJ will continue to raise rates if inflation remains on track to reach 2%.
While the BOJ kept rates steady in December, Ueda said it will review data on next year's wage outlook to judge how quickly it will raise borrowing costs.
All respondents to a Reuters poll taken earlier this month expected the BOJ to raise rates to 0.50% by the end of March. The BOJ next meets for a rate review on January 23-24, followed by another meeting on March 18-19.
