Japan Aug corporate services price index rises for 1st time in 8 yrs

The corporate services price index rose 0.3 pct from a year earlier to 92.8 in August, the first increase in more than eight years, the central bank said, a fresh sign that Japan continues to move away from years of deflation. The rise was due to higher cost of ocean freight transportation and software development, the Bank of Japan said. The central bank said it was the first year-on-year increase for the index since March 1998 when it rose 1.2 pct. The index fell 0.3 pct from July. In July the corporate services price index rose a revised 0.1 pct from June, and was unchanged from a year before. "The data are the latest confirmation that prices are rising, supporting a recent trend in the consumer price index," said Norio Miyagawa, an economist at Shinko Research Institute. "The figures showed that Japan is on track to exit deflation." Japan's core CPI rose 0.2 pct year-on-year in July, following a 0.2 pct gain in June. But Miyagawa said the central bank is unlikely to raise interest rates any time soon because of concerns of a slowdown in the US economy. "Even though Japan's CPI showed a clear rising trend, there are concerns on the US economy, particularly in the housing market. So, I personally believe the BoJ will wait until next summer to raise rates further," he said. The corporate services price index tracks prices for a wide range of corporate services, ranging from finance and insurance charges to cost of shipping goods by road, rail, air or sea, software development costs, telecommunications charges and legal and accounting fees.