TOKYO (Reuters) – The Bank of Japan said on Friday it will consider publishing new indices that shed more light on the degree to which labour costs are affecting inflation in the service sector, amid a growing focus on whether inflationary pressures are broadening.
The move is part of the central bank’s plan to upgrade its services producer price index, which tracks the prices firms charge each other for services, when its base year changes to 2020 from the current 2015 around the middle of this year.
As part of the base-year revision plan, the BOJ is considering publishing as reference an index that tracks the price moves of services for which the ratio of personnel fees to total costs is high, such as transportation and information services.
It will also consider publishing another index that tracks service prices for sectors with a low personnel fee-to-total cost ratio such as leasing, advertising and real estate. Service prices for such sectors are swayed more by raw material input costs.
Service inflation is being closely watched by the BOJ for clues on whether wage hikes are broadening enough to prod companies to pass on rising labour costs through price hikes.
BOJ Governor Kazuo Ueda has said both wages and service prices need to rise durably for inflation to sustainably hit the bank’s 2% target, and meet the conditions for phasing out its massive monetary stimulus.
(Reporting by Leika Kihara; Editing by Andrew Heavens)
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