–Upwardly Revised +10.5% Y/Y in December 2022 Now 42-Year High
By Max Sato
(MaceNews) – Producer inflation in Japan eased in January as energy and commodity markets turned softer on slowing global demand and the recent rebound in the yen helped lower import costs, but the annual rate just under 10% indicates firms are still trying to pass on the past year’s sharp cost rises, data released Friday by the Bank of Japan showed.
The key points of CGPI:
* The corporate goods price index (CGPI) rose 9.5% on the year in January, coming just under the median economist forecast of a 9.6% rise (forecasts ranged from 9.3% to 10.1% gains). It was the 23rd consecutive gain following increases of 10.5% (revised up from 10.2%) in December, 9.8% (revised from 9.7%) in November and 9.7% (revised from 9.6%) in October. The upwardly revised annual rate of 10.5% in December surpassed September’s 10.3% gain, hitting a 42-year high. It is the highest 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.
* The relatively weak yen at around Y130 to the dollar in January, compared to Y115 a year earlier, is keeping import costs high. The year-over-year increase in the CGPI’s import price index in yen terms was 17.8% on year in January (22.2% in December), higher than 7.2% (7.6% previously) in contract currencies. However, the pace of yen-based price increases continued to slow from a 49.2% surge in July 2022. The dollar depreciated 3.5% against the yen on the month in January after falling 5.2% in December and 3.2% in November and rising 2.9% in October, BOJ data showed. The dollar briefly surged to a 32-year high of Y151.94 in October but Japan’s second wave of massive yen-buying forex intervention pushed it down to a low of Y143.55 in the same month.
* The producer costs for electric power, gas, and water — the category that is also driving consumer prices higher — surged 49.7% on the year in January, but the pace of increase decelerated from 53.4% in December after recent acceleration.
* Iron and steel maintained a double-digit percentage gain but posted a slower increase of 19.2% after rising 21.0% the previous month. Those for chemicals continued slowing to a 6.0% rise from a 7.3% increase. The prices for non-ferrous metals rose 6.0% in January, also decelerating from a 7.6% gain in December.
* The year-on-year change in the prices for petroleum and coal products turned negative, down 0.5% in January after rising 8.1% in December. The prices for lumber and wood products fell 8.2% from a year earlier in January for the third straight drop after falling 4.8% in December.
* By contrast, the upward pressure on the prices for pulp and paper continued, rising 14.6% in January after a 13.7% gain in December. Ceramic, stone and clay products also picked up their pace of increase slightly to 11.7% from 11.5%.
* The prices for the beverages and foods — a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI — rose 8.0% on the year in January after rising at a similar pace of 8.1% in December. Those for transport equipment (150.9 weight) rose 4.6%, slowing from a 5.0% gain the previous month.
* On the month, the domestic CGPI was unchanged in January after rising 0.7% in December (revised up from a 0.5% gain) and slowing from the recent peak of a 1.6% rise hit in April 2022. It was below the median economist forecast of a 0.3% gain (forecasts ranged from 0.1% to 0.7% gains). The costs for utilities (electricity, water), metal products, non-ferrous products and pulp and paper posted increases while the prices for fuels and farm produce (meat) fell after recent gains and those for lumber and wood products continued to slide.