2023-08-18 04:32:08
The rate of increase in Japan’s service prices in July reached the highest level in regarding 30 years. At the moment, the main focus is on the impact of rising prices of goods such as food, but in predicting the timing of the Bank of Japan’s monetary policy normalization, the focus will be on whether or not there will be an increase in the tendency to reflect wage increases in service prices in the future.
According to the National Consumer Price Index (CPI) for July released by the Ministry of Internal Affairs and Communications on the 18th, service prices, which are more likely to reflect underlying trends in prices such as wage trends, rose 2.0% year-on-year, down 1.6% from the previous month. The growth rate expanded from the rise. Excluding the impact of the consumption tax hike, it marked the highest growth since October 1993.
Services related to telecommunications, education and entertainment, eating out, and housework-related services contributed to the increase. According to the Ministry of Internal Affairs and Communications, revisions to mobile phone billing plans and increases in the prices of goods have had a major impact, and the Ministry of Internal Affairs and Communications will closely monitor whether this is due to wage increases.
The core CPI, excluding fresh food, increased by 3.1%, slowing down from the previous month mainly due to the widening decline in electricity bills, while the core CPI, excluding energy, increased by 4.3%, expanding its positive range. The Ministry of Internal Affairs and Communications explained that the rise in labor costs is also a factor in the increase in restaurant prices.
Service prices are at the highest level in regarding 30 years
Clearing one hurdle to the normalization of BOJ policy
Source: Ministry of Internal Affairs and Communications
Shinichi Uchida, Deputy Governor of the Bank of Japan, said in a speech on the 2nd that goods were the main cause of the current price rise. It’s a very possible corporate strategy to start thinking regarding pricing that takes gender into account.” He said that changes in firms’ wage and pricing behavior were “still in the early stages”.
Bloomberg Economics view
“The rise in service prices is a clear signal that the underlying price trend has strengthened in a way that has not been seen for a long time. It is not yet clear whether it will be
Taro Kimura Senior Economist
The Bank of Japan released a new outlook for economic and price trends (Outlook Report) on the 28th of last month, and revised its core CPI forecast for fiscal 2023 to 2.5%, a significant upward revision from the previous 1.8% rise. The reason for this is that the past rise in import prices will be passed on to prices, but the upside risk to the future is that companies may become more proactive in setting wages as they become more aware of securing human resources. is also mentioned.
zero price mountain
The outlook report compares the distribution of the year-on-year growth rates of items that make up the consumer price index in Japan, the United States, and Europe. While inflationary pressure is increasing worldwide, Japan remains at the top of the mountain with the highest number of items near zero percent, centered on services, while Europe and the United States have a wide range of items, regardless of whether they are goods or services. has risen, and the peak itself has clearly shifted towards a higher rate of rise.
Shunsuke Kobayashi, chief economist at Mizuho Securities, pointed out that Japan’s inflationary pressure is shifting from an external shock to an introspective factor in the rise in service prices. Considering the tight labor supply and demand, it is possible that next year’s wage hike will exceed this year’s. He expressed his view.
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