–Export, Import Producer Prices Down on Month Amid Slower Global Demand
By Max Sato
(MaceNews) – Producer inflation in Japan steadied at a relatively high level in August after easing in July to the slowest pace in seven months and hitting a 41-year high in April, as slightly faster year-on-year gains in the costs for fuels and metals were offset by slower rises in lumber and steel, data released Tuesday by the Bank of Japan showed.
Both export and import prices posted sharp month-on-month declines in contract currencies amid signs of slowing global demand.
The outlook for producer prices is uncertain as international energy and commodities markets remain volatile with downward pressure from tightening by many central banks and China’s strict anti-Covid measures. Fuel and non-ferrous metal prices eased earlier on slower global growth while utility charges I Japan are expected to be raised further, reflecting higher oil and gas prices earlier this year.
As more Japanese firms are passing higher producer costs on to customers, core consumer prices are estimated by the Bank of Japan to rise 2.4% in fiscal 2022 before slowing to 1.4% in the next fiscal year on fading effects of the earlier surge in energy and commodities prices.
BOJ policymakers are expected to maintain their easing stance for now. They do not expect inflation to be anchored around its stable 2% target any time soon, and that conviction is unlikely to change when they release their updates in the quarterly Outlook Report in October.
The key points of domestic CGPI:
* The corporate goods price index (CGPI) rose 9.0% on the year in August, coming in slightly above the median economist forecast of an 8.9% rise. It was the 18th consecutive gain after rising 9.0% (revised up from 8.6%) in July, 9.4% in June, a revised 9.2% in May and a revised 9.0% in April. The April figure 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 pressures on already high import costs at producer levels, which also marked the 18th straight year-on-year rise. The increase in yen terms was larger at 42.5% in August (49.1% in July), compared to 21.7% (26.1% previously) in contract currencies, although the pace in yen-based price increase was the slowest since 32.6% in March this year.
* The prices for lumber and wood products remained elevated but continued easing to a 20.2% increase in August from a 30.6% rise in July and a 43.5% jump in June. Those for non-ferrous metals rose 10.5%, up slightly from 10.2% gain in July but much slower than a 16.2% rise in June. The prices for iron and steel rose 26.1%, easing from 27.3% the previous month.
* The prices for petroleum and coal products rose 15.6% on the year in August, accelerating from 14.7% in July but easing sharply from 21.8% in June. Electronic parts and devices showed a higher 2.2% increase in August, compared to a 1.8% rise in July.
* On the month, the domestic CGPI edged up 0.2% in August after rising 0.7% (revised up from 0.4%) in July and 0.9% in June, being flat in May and rising 1.5% in April. It was just under the median economist forecast of a 0.3% rise. Utilities (electricity) and iron and steel led the increase, more than offsetting declines in the prices of scrap and waste and refined petroleum products (gasoline, diesel and heating oil).
* Export producer prices in contract currencies fell 1.3% on the month in August after slipping 0.2% in July and being flat in June. Import producer costs dipped 1.2% for the first month-on-month drop in seven months after rising 1.2% in July and 1.9% in June.