–September’s Annal Rate Revised to +10.3% from +10.2%, Remains Highest in 41 Years
–Weak Yen Continues Boosting Import Costs for Producers but at Slower Pace Amid Dollar Pullback
By Max Sato
(MaceNews) – Producer inflation in Japan eased only slightly in November from an upwardly revised gain in October and a 41-year high in September as utility charges stood nearly 50% above year-earlier levels and iron and steel prices remained high, up 20%, mitigating the effects of shrinking fuel costs and a slight drop in lumber prices, data released Monday by the Bank of Japan showed.
BOJ policymakers are expected to maintain their easing stance at their upcoming meetings until at least Governor Haruhiko Kuroda’s second five-year term ends in early April. They do not expect consumer inflation to be anchored around its stable 2% target any time soon after what they see as a temporary spike to over 3% this year while supply exceeds demand in the Japanese economy.
The key points of domestic CGPI:
* The corporate goods price index (CGPI) rose 9.3% on the year in November, coming in above the median economist forecast of an 8.8% rise. It was the 21st consecutive gain following a 9.4% rise (revised up from 9.1%) in October. The annual rate in September was also revised up to 10.3% from 10.2%, with the pace of increase remaining a 41-year high. It is the highest since December 1980, when the index jumped 10.4% for a 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 pressures on already high import costs at producer levels, which also marked the 21st straight year-over-year rise. The increase in yen terms was 28.2% in November (a revised 42.3% in October), much higher than 8.6% (a revised 16.4% previously) in contract currencies. However, the pace in yen-based price increase continued to slow from a revised 49.2% jump in July. The dollar depreciated 3.2% against the yen in November from October, when it appreciated 2.9% on the month, BOJ data showed.
* 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 November, with the pace of increase accelerating further from an upwardly revised 44.1% in October. Iron and steel maintained a double-digit percentage gain but posted a slower increase of 20.9% after rising a revised 23.1% the previous month. The prices for non-ferrous metals rose 6.5% in November, decelerating from a revised 8.4% gain in October. Those for chemicals also slowed to an 8.1% rise from an 8.7% increase.
* The upward pressures were seen in the prices for pulp and paper (up 10.4% in November versus a revised 9.7% in October) and ceramic, stone and clay products (up 10.5% in both November and October),
* 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 7.2% on the year in November after rising an upwardly revised 7.2% in October. Those for transport equipment (150.9 weight) rose 4.1% after a revised 4.5% gain the previous month.
* The prices for lumber and wood products now posted a 1.1% drop from a year earlier in November, softening further from a slight 0.1% rise in October and an 8.6% gain in September. The year-over-year rise in the prices for petroleum and coal products showed a continued slowdown to 0.5% in November from a revised 2.8% in October and 14.5% in September.
* On the month, the domestic CGPI rose 0.6% in November after rising 0.8% in October (revised up from a 0.6% gain) and hitting a recent peak of a 1.6% rise in April. The pace was slightly faster than the median economist forecast of a 0.5% gain. The increase was led by higher costs for utilities (electricity, gas supply), farm produce (chicken eggs, brown rice), beverages and foods (buns, cakes), non-ferrous metals (copper, aluminum alloys), largely as seen in the previous month but with a sharper rise in utilities. Lumber prices continued to decline.