Japanese companies are raising service prices at the fastest pace since 1992, passing on higher labor costs to business customers.

Producer prices in labor-intensive services increased by 3.3% in October compared to the previous year, according to data from the Bank of Japan. This increase in pricing reflects businesses' growing ability and willingness to adjust prices in response to rising operational costs.

The Bank of Japan released the data as part of efforts to assess the potential for a virtuous economic cycle, where companies can sustain price increases to cover their expenses. Excluding the impact of a 2014 sales tax hike, the current surge in service prices represents the most significant rise in over three decades, which further fuels discussions on the need to raise the benchmark interest rate.