By Max Sato
(MaceNews) – Producer inflation in Japan eased slightly in June after hitting a 41-year high in April as year-on-year gains in the costs for lumber and wood products as well as iron and steel slowed, while the prices of gasoline and other fuels picked up the pace of increase again, data released Tuesday by the Bank of Japan showed.
Supply constraints continued pushing up producer costs, but the Bank of Japan board expects consumer inflation to slip back to around 1% in the next fiscal year from above 2% now. It will update its GDP and CPI forecasts and risk analysis in its quarterly Outlook Report due next week when the bank is expected to maintain its easing stance.
The key points of domestic CGPI:
* The corporate goods price index (CGPI) rose 9.2% on the year in June, coming in firmer than the median economist forecast of an 8.9% rise. It was the 16th consecutive gain after rising 9.3% (revised up from 9.1%) in May and 9.9% (revised from 9.8%) in April and 9.3% in March. The 9.9% rise in April remains the highest since December 1980, when the index jumped 10.4% for the 14th straight month of double-digit percentage gains in the wake of the 1979 oil crisis triggered by the Iranian Revolution.
* The depreciation of the yen continues exerting upward pressure on already high import costs at producer levels, which also marked the 16th straight year-on-year rise. The increase in yen terms was larger at 46.3%, compared to 25.8% in contract currencies.
* Prices for lumber and wood products remained elevated but continued easing to a 43.3% increase in June from a 57.2% rise in May. Prices for iron and steel rose 26.7%, also slowing further from a 30.3% rise the previous month.
Those for non-ferrous metals gained 16.2% after rising at the same pace in May and at a faster pace of 24.6% in April.
* Prices for petroleum and coal products rose 22.2% on year in June, accelerating from a 21.6% rise in May, but the pace was slower than 30.7% in April.
Gasoline and other fuels, chemical products and utilities (gas, electricity) led the increase, more than offsetting slight declines in the prices of scarp and waste and nonferrous metals.