Japan's business services prices rise at fastest pace since 1991

Bank of Japan data show the country's corporate services prices rose in April at the fastest annualized pace since 1991 after stripping out the impact of tax hikes.

The BOJ said on Tuesday that its Services Producer Price Index rose in April by 2.8 percent year-on-year.

The central bank monitors services prices closely as they tend to reflect labor costs more accurately than commodity prices.

Policymakers are looking for signs that a virtuous cycle between wages and prices has been established.

Prices in the civil engineering and construction sector increased 7.5 percent, while machinery repair costs rose 5.5 percent.

Road cargo transportation costs logged a 3.1 percent increase after a cap on overtime work by truck drivers was introduced in April.

An increasing number of businesses have raised wages on the back of labor shortages and soaring prices.

The BOJ says there are moves to pass on higher labor costs in the prices of goods and services.