TOKYO :The Bank of Japan said on Monday that price hikes were broadening, as many companies saw the need to keep raising wages due to structural labour shortages.
But some small and medium-sized companies voiced concern over severe profit pressure, which warranted vigilance, the central bank said in a quarterly report on regional economies.
The BOJ also said consumption remained firm, with spending by the younger generation, who enjoyed the benefits of higher wages, underpinning demand, the report said.
“While some companies said they were struggling to pass on expected rises in labour costs, a growing number of firms in the service sector were doing so or were considering doing so,” the report said.
In the report, the BOJ revised up its assessment for two of nine regional areas in Japan. It left the assessment for the remaining regions unchanged.
The BOJ in March delivered its first rate hike in 17 years, arguing the pace of price and wage increases showed Japan was finally shaking its entrenched deflationary mindset.