The price Japanese companies charge each other for services rose 2.5% in May from a year earlier, data showed on Tuesday, a sign prospects of steady wage increases are prompting more companies to pass on higher labour costs, Reuters reported. The year-on-year increase, however, slowed from the previous month's 2.7% gain, Bank of Japan (BOJ) data showed.

Bank of Japan board members discussed the case for an interest rate hike as upside risks to inflation become “more noticeable,” according to a summary of opinions from the June policy meeting, Bloomberg News reported. “It is necessary for the bank to continue to closely monitor relevant data in preparation for the next monetary policy meeting,” one of nine board members said, according to the summary released Monday in Tokyo.

Japan’s consumer inflation picked up in May, adding to market expectations for interest rate increases from the Bank of Japan, the Wall Street Journal reported. Overall consumer prices in May rose 2.8% compared with the same period a year earlier, due mainly to higher electricity bills, compared with the 2.5% increase in April, government data showed Friday. Many analysts and traders expect the Japanese central bank to raise its interest-rate target this year, with inflation staying above the bank’s 2% target for more than two years.

Japan's exports surged 13.5% in May, faster than expected growth helped by a weak yen and strong demand in the U.S. and Asia, the Associated Press reported. Finance Ministry data reported Wednesday showed that the trade deficit totaled 1.22 trillion yen ($7.7 billion), down nearly 12% from 1.38 trillion yen a year earlier. Imports grew 9.5%, year-on-year, to nearly 9.5 trillion yen ($60 billion). Exports totaled 8.3 trillion yen ($53 billion) and grew at the fastest since November 2022.

The Bank of Japan said it would reduce government bond purchases in a signal of monetary tightening, as it left its policy interest rate unchanged, the Wall Street Journal reported. Monetary tightening in general should support the yen, but the Japanese currency instead weakened Friday because the central bank didn’t offer specifics on its bond plans. The yen was trading at around 158 to the dollar after the move, compared with around 157 before. Later Friday the yen recovered some of the lost ground.

The number of corporate bankruptcies in Japan surged 42.9% from a year earlier to 1,009 in May, credit research firm Tokyo Shoko Research said on Monday, the Japan Times reported. The monthly number exceeded 1,000 for the first time since July 2013, when it reflected the impact of the end of funding support measures for small businesses introduced after the 2008 global financial crisis. The latest result came as many companies struggle with rising prices, as well as labor shortages mainly in the service sector.

Japan's government will highlight the need to work closely with the central bank and guide policy "flexibly" in the wake of soft consumption and uncertainty over the inflation outlook, a draft of its annual economic blueprint seen by Reuters showed. "Monetary policy has entered a new stage," which required the government and the Bank of Japan to "continue working closely and guide policy flexibly in accordance to economic and price developments," according to the draft.

Bank of Japan policy board member Toyoaki Nakamura said Thursday that he is still not fully confident that wages and inflation will keep growing, adding that it is appropriate for the bank to maintain its current monetary policy for the time being, the Wall Street Journal reported. “I am not confident about the sustainability of wage increases,” Nakamura said in a speech to business leaders in the northern prefecture of Hokkaido.

Bank of Japan Deputy Governor Ryozo Himino said the central bank must be "very vigilant" to the impact the yen's moves could have on the economy, suggesting the currency's weakness will be among factors affecting the timing of its next interest rate hike, Bloomberg News reported. However, he said that it was inappropriate for central banks to directly target exchange rates in setting monetary policy, as other factors needed to be considered as well. "Exchange-rate fluctuations affect economic activity in various ways.

Japanese companies trimmed capital investment in the first quarter, a result that likely indicates revised data due next week will continue to show the economy contracted in the period, Bloomberg News reported. Capital expenditures on goods excluding software fell 0.5% in the three months through March from the previous quarter following a surge in spending at the end of last year, the finance ministry reported Monday. Manufacturers led the decline, cutting spending by 3% from the prior quarter, while service-sector firms boosted spending a tad.