By Leika Kihara

TOKYO (Reuters) – A leading indicator of inflation in Japan’s services sector rose to 3.0% in November, accelerating for a second straight month, data showed on Wednesday, supporting the central bank’s view that bank that the increase in wages pushed many companies to pass higher. cost.

Services sector inflation is being watched closely by the Bank of Japan, which compiles data on Wednesday, for signs of whether demand-driven price gains have widened enough to justify further interest rate hikes. .

The November year-over-year gain in the services producer price index, which measures the price companies charge each other for services, accelerated from a 2.9% gain in October.

The index, at 109.1, marked its highest level since March 1995.

The increase was driven by higher prices of various services, from accommodation to machinery repair to construction.

The BOJ ended negative interest rates in March and raised its short-term policy rate to 0.25% in July as Japan continued to move towards a stable rate of 2 % inflation target.

Governor Kazuo Ueda said the BOJ will continue to raise rates if inflation stays on track to hit 2%.

While the BOJ kept rates steady in December, Ueda said he would examine next year’s future wages data to judge how quickly it will push up borrowing costs.

All respondents to a Reuters poll taken earlier this month expected the BOJ to raise rates by 0.50% by the end of March. The BOJ will next meet for a rate review on January 23-24, followed by another meeting on March 18-19.