Japanese business services inflation accelerated in October, suggesting a build-up in price pressures

　　JPN's inflation in the price of business-to-business services accelerated in October as a tight job market pushed up Labour costs, underscoring a build-up in price pressures that could increase the likelihood of an end to ultra-loose monetary policy in the near term.

　　The producer price index for the services sector, which measures what companies charge each other for services, rose 2.3 per cent in October from a year earlier, Bank of Japan data showed on Monday, up from a revised 2.0 per cent in September.

　　Due to higher labor costs, fees for information communications, machinery maintenance and labor dispatch businesses increased from the same period last year. The surge in inbound tourism pushed up hotel costs by 49.9 per cent.

　　The figures suggest that Japan's economy is on track for a sustained rise in inflation and solid wage growth.

　　Bank of Japan Governor Kazuo Ueda said inflation was largely cost-driven and would have to shift to more demand-driven price increases, supported by wage growth, before the central bank would consider normalizing its ultra-loose monetary policy.

　　His remarks focused the market more on the direction of service prices, as they are the most vivid reflection of wage pressures that companies are facing in their operations.

　　Inflation has remained above the Bank of Japan's 2 percent target for more than a year, and companies are under unprecedented pressure to compensate workers with wage increases to retain and attract talent.

　　Companies, unions and analysts point to evidence that the Labour and cost pressures that prompted this year's pay rises - the biggest in more than three decades - will continue into next year's crucial spring wage negotiations.

　　In an October survey, nearly two-thirds of analysts expected the BOJ to end its negative interest rate policy next year.