Japan's Services Producer Price Index climbs 2.6 percent in January

The Bank of Japan reported that the Services Producer Price Index (SPPI) rose 2.6 percent year-on-year in January 2026. This marks a preliminary increase for all items.

Services prices maintain upward momentum

The Services Producer Price Index (All items) for January 2026 rose 2.6 percent from the previous year, according to preliminary figures from the Bank of Japan.

This annual growth rate matches the 2.6 percent recorded in December 2025. The index, with CY2020 as its base year, stood at 111.9 in January, down from 112.5 in December.

Similarly, the index excluding international transportation also increased by 2.6 percent year-on-year, reaching 111.6, consistent with its December reading.

Both indices experienced a monthly decrease of 0.5 percent in January, following zero monthly change in December.

This monthly decline indicates a moderation in short-term price dynamics, contrasting with the stable annual growth.

Over the past three years, the overall index has shown annual increases of 2.2 percent in CY2023, 3.2 percent in 2024, and 3.0 percent in 2025, highlighting a sustained upward trend in service sector prices.

Sectoral shifts in price dynamics

The overall yearly change saw varied contributions from major groups.

'Other services' contributed 1.16 percentage points, 'Information and communications' 0.50 percentage points, and 'Leasing and rental' 0.34 percentage points.

Specific subgroups like civil engineering and architectural services recorded a 5.4 percent yearly change, while hotels saw a 4.5 percent increase.

In contrast, 'Access charges' within 'Information and communications' declined by 0.5 percent year-on-year.

Monthly differences in yearly changes highlighted significant shifts: hotels experienced a sharp deceleration with a -9.7 percentage point monthly difference in their yearly change.

Conversely, software development showed a positive monthly difference of 0.1 percentage points, indicating an acceleration in its annual price growth.

This mixed picture suggests that while some service sectors continue to see robust price increases, others are experiencing a notable slowdown.

Beneath the surface: diverging trends

While the headline Services Producer Price Index remained stable year-on-year, the underlying monthly decline and varied sectoral contributions suggest a more nuanced picture.

The sharp deceleration in hotel prices, alongside sustained increases in other areas like software development, indicates a divergence in inflationary pressures across the services sector.

This complexity will challenge policymakers seeking to understand the true trajectory of domestic inflation.