Japan’s Services PPI was flat in December and up 2.9% YoY, down from 3.0% YoY in November. Excluding international transportation, Services PPI was still flat and was up 3.0% YoY, down from 3.1% YoY. The heavily weighted “other services” segment fell -0.4% MoM as a result of hotel services prices down -7.7% MoM. This offset gains in other groups like real estate services (+0.6% MoM), transportation & postal services (+0.3% MoM), and information & communication (+0.1% MoM).

Despite the strong monthly decline, “other services” still accounts for 1.59 ppts of the annual increase as hotel services prices are still up a sharp 12.0% YoY (though that is down from 19.1% YoY). Within transportation, air transport, travel arrangement services, and postal services costs remain elevated on an annual basis.