Corporate service prices rose at their fastest pace in more than nine years in May, the Bank of Japan said Tuesday.
The figure backs the central bank's case that inflation will take hold.
Corporate service prices climbed 1.4 percent from a year earlier, the steepest gain since December 1997, the BOJ said. The prices only began rising in August after eight years of declines.
Faster growth in the costs that companies pay for services such as transportation and rent may prompt them to raise prices, sparking inflation.
BOJ Gov. Toshihiko Fukui has said consumer prices, which fell in April for the third straight month, will rise over the long term.
"The strong gains we've been seeing in corporate service prices show that prices are starting to heat up," said Takuji Aida, chief Japan economist at Barclays Capital in Tokyo. "It's only a matter of time before these gains are reflected in consumer prices."
Fukui said May 17 it is possible for the central bank to raise interest rates with falling consumer prices, as long as policymakers are confident about the outlook for the economy and inflation.
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