Service prices, a key component of Japan’s inflation data, are sustaining momentum, adding to the case for the Bank of Japan to take another step before too long toward policy normalization.

Rising prices for everything from haircuts to dry cleaning show that underlying consumer price trends may be sturdier than in the past. About 60% of major service providers surveyed in March said they would lift their prices or consider doing so in April, according to the Nikkei newspaper.

"Prices of some service items, which had barely moved in the past, have recently risen by 1% or so, confirming the positive development that the BOJ has cited,” said Hiroshi Kawata, a senior economist at Mizuho Research & Technologies.