TOKYO, May 28 Reuters Japanese corporate services prices in April rose at their fastest pace since early 2015, Bank of Japan data showed on Tuesday, boosted by labour costs in the services sector in a positive signal for policymakers looking for wagesled cycle of demand growth.

The Corporate Services Price Index CSPI rose 2.8 yearonyear in April, following a 2.4 increase in the previous month. For the month, the service prices rose 0.7 from March, slowing from the prior month39;s 0.9.

The annual gains reflect rising labour costs in labourintensive service businesses such as machine repair and industrial facility renovation.

The index is closely watched by policymakers as they look for solid wages to spark durable demandled inflation, which is a prerequisite for further Bank of Japan rate hikes after its landmark decision in March to end negative rates.

Low wages in Japan have long been a stumbling block to fostering sustainable consumption and broader economic growth. But businesses have recently delivered their biggest pay hikes in decades, seen by many as a major reason for BOJ39;s policy shift.

The central bank has signaled it will continue to raise interest rates albeit at a sedate pace given the fragile state of the Japanese economy.

Reporting by Tetsushi Kajimoto; Editing by Sonali Paul and Shri Navaratnam

Source Reuters