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Japan's service prices rise for 4th straight month as demand rebounds

·2 min read

By Leika Kihara

TOKYO, July 27 (Reuters) - Japan saw the prices companies charge each other for services rise for the fourth straight month in June, data showed on Tuesday, a sign the economy is gradually emerging from the hit from the coronavirus pandemic.

The services producer price index rose 1.4% in June from a year earlier after a 1.5% gain in May, reflecting a rebound in advertising fees and rent from last year's slump caused by the pandemic, Bank of Japan data showed.

The increase was also driven by a 1.3% rise in transportation fees as international freight prices continued to increase, highlighting the cost pressure companies are facing as economies across the globe re-open.

"Corporate services prices continue to recover gradually as a trend," Shigeru Shimizu, head of the BOJ's price statistics division, told a briefing.

While there will likely be some advertisement demand related to the Tokyo Olympic and Paralympic Games in coming months, it could be modest compared with past Games, he said.

Global economic growth prospects are holding strong for this year and next, despite a significant majority of economists in Reuters polls warning new variants of the coronavirus pose the biggest risk to the outlook.

Robust exports have helped Japan's economy emerge from last year's doldrums, though fresh state of emergency curbs have weighed on consumption and dashed policymakers' hope of a sharp rebound in July-September growth.

Rising commodity prices are also pinching margins for firms, many of which remain cautious of passing on the higher cost to customers due to weak household spending.

Japan's wholesale prices rose 5.0% in June from a year earlier. But core consumer prices climbed just 0.2% in June, remaining distant from the BOJ's 2% target. (Reporting by Leika Kihara; Editing by Sam Holmes)