–April’s 5.8% Lowest Y/Y Rise Since 5.7% in August 2021
–December’s 10.6% Surge Remains Highest in 42 Years
By Max Sato
(MaceNews) – Producer inflation in Japan eased for the fourth straight month in April as the government’s expanded utilities subsidies continued to cap energy costs and slowing global demand has cooled off many commodities markets, data released Monday by the Bank of Japan showed.
In its quarterly Outlook Report released last month, the BOJ board revised up its forecast for inflation for the current fiscal year ending next March while foreseeing consumer prices will lose some steam and fail to reach the bank’s elusive 2% target in a sustainable manner.
The key points of CGPI:
* The corporate goods price index (CGPI) rose 5.8% on the year in April, slightly above the median economist forecast of a 5.6% rise (forecasts ranged from 5.0% to 6.0% gains). It was the 26th consecutive rise following increases of 7.4% in March (revised from 7.2%), 8.3% in February and 9.6% in January (revised from 9.5%). December’s 10.6% rise remains the highest in 42 years, since November 1980, when the index rose 11.8 percent during the 14-month period of double-digit percentage gains through December 1980 in the wake of the 1979 oil crisis triggered by the Iranian Revolution.
* On the month, the domestic CGPI rose 0.2% in April after edging up 0.1% (revised from being flat) in March and falling 0.3% in February and slowing from the recent peak of a 1.6% rise hit in April 2022. It was in line with the median economist forecast of a 0.2% rise (forecasts ranged from being unchanged to a 0.5% rise). The modest increase was led by higher costs for utilities (electricity, water), petroleum and coal products (coal coke, gasoline, jet fuel), transport equipment (passenger cars, trucks, suspension and brake parts) and electrical machinery (electric luminaries). The prices for iron and steel as well as pharmaceutical products declined on the month.
* The yen firmed slightly to an average ¥133.40 to the dollar in April from ¥133.86 in March, but remained weak compared to ¥126.13 a year earlier. Combined with more stable energy and commodities markets, the currency exchange factor has helped lower import costs from elevated levels. The dollar briefly surged to a 32-year high of ¥151.94 in October 2022 but Japan’s second wave of massive yen-buying forex intervention pushed it down to a low of ¥143.55 in the same month.
* The producer costs for electric power, gas and water — the category that is also driving consumer prices higher — rose 25.8% on the year in April but the pace of increase continued decelerating from 26.8% in March.
* Iron and steel maintained a double-digit percentage gain but posted a slower increase of 10.9% after rising 17.4% the previous month. Those for chemicals continued slowing to a 1.9% rise from a 3.7% increase. The prices for non-ferrous metals fell 2.7% in April after rising 2.0% in March.
* The prices for petroleum and coal products fell 6.6% on the year in April after dipping 3.3% in March after turning negative in January. The prices for lumber and wood products plunged 17.9% from a year earlier for the sixth straight drop after falling 14.7%.
* Ceramic, stone and clay products eased to a 12.9% rise on the year in April from a 13.3% gain the previous month. Metal product prices were up 11.9%, off slightly from 12.4%.
* The prices for foods and beverages — a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI — rose 7.0% on the year in April after rising 7.6% in March. Those for transport equipment (150.9 weight) rose 3.8%, down from a 4.5% gain the previous month.