–September’s 2.0% Y/Y Rise Stays Lowest Since +1.0% in March 2021
–Producer Prices Post 1st M/M Drop in 3 months as Fuels Costs Slip After Recent Rebound
By Max Sato
(MaceNews) – Producer inflation in Japan eased for the ninth straight month in September, staying at an over two-year low, as the government’s utility subsidies continued to cut electricity and natural gas costs and the move among firms to pass last year’s spike in commodities prices onto customers has peaked, data released Thursday by the Bank of Japan showed.
Corporate goods prices unexpectedly posted their first month-on-month drop in three months in light of a pullback in fuel prices after a recent uptick in gasoline and diesel costs.
The data also showed business import prices posted the sixth straight year-over-year decline, which is expected to be reflected in consumer prices later this year.
The key points of CGPI:
* The 10.6% jump in December 2022 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 fell 0.3% in September after rising 0.3% in August and a revised 0.2% in July, and falling 0.1% in June and 0.7% in May. It has eased from the recent peak of a 1.6% rise hit in April 2022. The latest figure is weaker than the median economist forecast of a 0.2% rise (forecasts ranged from a 0.3% drop to a 0.3% gain). The decrease was led by lower costs for fuels (gasoline, diesel and heavy fuels), utilities (electricity and natural gas) and electrical equipment.
* The yen depreciated further to an average ¥147.67 to the dollar in September from ¥144.77 in August and ¥141.21 in July during Tokyo trading hours. It was much weaker than ¥130.20 in January. The appreciation of the yen seen earlier this 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 slumped 18.0% on the year in September for the third straight drop after falling 11.5% in August and posting double-digit percentage gains earlier. The government has extended its utilities subsidies until yearend as many households are calling for help amid elevated costs for daily necessities. The program was launched in January and it was originally scheduled to be phased out at the end of September.
* The prices for foods and beverages — a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI — rose 5.4% on the year in September after rising 6.1% in August. Those for transport equipment (150.9 weight) rose 2.4% after a 2.6% gain the previous month.
* Iron and steel prices posted a slower increase of 1.1% after rising 2.1% the previous month. Those for chemicals fell 2.6%, with the pace of decline little changed from a 2.5% drop. The prices for non-ferrous metals rose 5.7% in September for the third straight rise after rising 6.7% in August.
* The prices for petroleum and coal products also posted the third increase in a row, up 3.2% on the year in September, but the pace of increase slowed from 7.4% in August. The prices for lumber and wood products plunged 20.4% from a year earlier for the 11th straight drop after falling 22.8% in August.
* The prices for ceramic, stone and clay products eased further to a 14.5% rise on the year in September from a 16.1% gain the previous month. Metal product prices were up 7.3% after rising 8.2%.