–June’s 4.1% Y/Y Rise Lowest Since 3.8% in April 2021
–December’s 10.6% Surge Remains Highest in 42 Years
By Max Sato
(MaceNews) – Producer inflation in Japan eased for the sixth straight month in June, hitting a fresh two-year low, as the government’s expanded utilities subsidies continued to cap energy costs and many commodities markets are softer on slowing global growth, particularly compared to last year’s spike, data released Wednesday by the Bank of Japan showed.
The key points of CGPI:
* The corporate goods price index (CGPI) rose 4.1% on the year in June, below the median economist forecast of a 4.4% rise (forecasts ranged from 3.9% to 5.1% gains). It was the 28th consecutive gain but the lowest since 3.8% seen in April 2021, following increases of 5.2% (revised from 5.1%) in May, 6.0% (revised from 5.9%) in April, 7.4% in March, 8.3% in February and 9.6% in January. 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 dipped 0.2% in June after falling 0.7% in May, rising 0.3% in April, edging up 0.1% in March, falling 0.3% in February and slowing from the recent peak of a 1.6% rise hit in April 2022. It was lower than the median economist forecast of a 0.2% rise (forecasts ranged from a 0.2% fall to a 0.8% gain). The decrease was led by lower costs for utilities (electricity, city gas), chemical products, farm produce and lumber.
* The yen depreciated further to an average ¥144.85 to the dollar in June from ¥137.39 in May and ¥133.40 in April and remained weak compared to ¥136.20 a year earlier. Combined with easing energy and commodities markets, an earlier appreciation of the yen since late last year had 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 rose 5.3% on the year in June, with the pace of increase decelerating further from 12.8% in May. The government began providing utilities subsidies in January and the program will continue through September.
* Iron and steel prices posted a slower increase of 7.8% after rising 9.2% the previous month. Those for chemicals fell 3.8% after a 0.8% drop. The prices for non-ferrous metals fell 0.5% in June after falling 2.0% in May.
* The prices for petroleum and coal products slid 2.6% on the year in June after dipping 1.6% in May. The prices for lumber and wood products plunged 22.2% from a year earlier for the eighth straight drop after falling 21.0%.
* The prices for ceramic, stone and clay products eased to a 15.6% rise on the year in June from a 16.2% gain the previous month. Metal product prices were up 9.4%, slowing from a 11.2% rise.
* The prices for foods and beverages — a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI — rose 7.4% on the year in June after rising 8.0% in May. Those for transport equipment (150.9 weight) rose a modest 3.2% after a 3.6% gain the previous month.