A leading indicator of Japan's service-sector inflation held near 3% in October, data showed on Tuesday, offering further evidence that conditions for another near-term interest rate hike by the Bank of Japan were falling into place.

The Bank of Japan is watching service-sector inflation for clues on whether demand-driven price gains are broadening enough to justify further raising interest rates.

Japan’s overall consumer inflation continued to slow in October, but a rise in underlying price pressures could further clear the path for the central bank to hike rates in December.

A leading indicator of Japan's service-sector inflation held steady near 3% in October, data showed on Tuesday, reinforcing the central bank's view that rising wages are prodding more firms to pass on higher labour costs through price hikes.

Japan's headline inflation rate slipped to 2.3% in October, its lowest level since January and down from the 2.5% seen in September. The core inflation rate fell to 2.3% from 2.4%, slightly higher compared to the 2.

Japan's core consumer prices in October rose 2.3% from a year earlier, slowing from September's pace but continuing to exceed the central bank's 2% target in a sign conditions for further interest rate hikes were falling in place.

The annual inflation rate in Japan fell to 2.3% in October 2024 from 2.5% in the prior month, marking the lowest reading since January. Japan's core consumer price index, which excludes fresh food but includes fuel costs,