Rising labor costs in service sectors like machine repair and industrial renovation have led to the fastest annual increase in Japan's business service prices since 2015. Policymakers view wage growth as essential for sustained demand-led inflation and further rate hikes. Recent significant pay hikes reflect a shift in BOJ's policy amid Japan's fragile economy.

Japan's three largest banks have announced increases in interest rates for housing loans next month, following adjustments in the Bank of Japan's monetary policy. Sumitomo Mitsui Banking Corp will raise 10-year fixed-rate loans by 0.26 percentage points to 3.79%. Mizuho Bank will increase its rate by 0.3 percentage points to 3.50%, while Mitsubishi UFJ Bank will raise its rate by 0.18 percentage points to 3.7%.

The end of pandemic restrictions on businesses in late March helped spur the economy. Consumer spending, which accounts for more than half of Japan’s economic output, led the growth, as did capital expenditure. The relaxing of Covid rules resulted in increased spending at restaurants and hotels, as well as on clothes, according to the Cabinet Office.

Hongkongers are returning to the Japanese property market after a two-year absence, taking advantage of a weakening yen, which is at a 20-year low against the US dollar. “Inquiries for Japanese homes from Hongkongers have surged by up to 40 per cent this month,” said Anvy Cheung, chief executive of Sakura Global, which specialises in Japanese property. “In the past two years, most of them just stayed on the sidelines, adopting a wait-and-see approach [due to the pandemic].”