Huge month-to-month jumps for second month in a row as businesses jack up their prices for new fiscal year.

By Wolf Richter for WOLF STREET.

The producer price index for services in Japan has seen a significant jump for the second month in a row, with businesses increasing their prices as they enter the new fiscal year. According to data from the Bank of Japan, the index rose by 0.82% in April from March, following a similar increase in March from April. This has led to an annualized increase of over 10%.

The spike in prices is attributed to companies adjusting their prices at the start of the fiscal year, with many passing on their wage increases to customers. The services that saw the biggest price surges include civil engineering and architectural services, training and development services, and hotels.

The Bank of Japan has noted that inflation in services is spreading throughout the economy, indicating a need for substantial rate hikes to combat rising prices. The central bank’s reluctance to raise rates has caused the yen to weaken, ultimately impacting the currency’s value.

Overall, businesses are expected to pass on these price increases to their customers, highlighting the impact of wage inflation on the economy. The recent acceleration in prices underscores the need for decisive action to address the growing inflationary pressures.