A leading indicator of Japan's service-sector inflation held steady at 2.7% in August, data showed on Wednesday, underscoring the central bank's view that rising wages are prodding more firms to pass on higher labour costs through price hikes.

Japanese inflation rose slightly in August, with prices up 2.8 percent year-on-year, official data showed Friday, hours before the Bank of Japan was widely expected to leave interest rates unchanged.

The prices Japanese companies charge each other for services rose 2.7% in August from a year earlier, steady from the previous month, central bank data showed on Wednesday. Service-sector inflation is closely watched by the Bank of Japan (BOJ) for clues on whether prospects of rising wages are prodding firms to hike prices and leading to broader-based inflation,