JP: Producer Price Index

Wed Feb 11 17:50:00 CST 2015

Consensus Actual Previous Revised
Month over Month -0.7% -1.3% -0.4% -0.5%
Year over Year 1.1% 0.3% 1.9% 1.8%

Producer prices continued to weaken in January. The PPI dropped 1.3 percent on the month and edged up only 0.3 percent from the same month a year ago. Since June, the annual rate of increase has declined with the pace of the weakening picking up speed in the last few months. Excluding the impact of the sales tax, the PPI dropped 2.4 percent on the year after declining 1.0 percent in December. Petroleum prices were a major drag on the index. They were down 23.1 percent on the year. Chemicals & related products were also lower, down 4.7 percent. All other subcategories advanced.

The producer price index, is a measure of the average price level for a fixed basket of capital and consumer goods paid by producers.

The producer price index focuses on the prices of goods transacted between companies. It was previously known as the corporate goods price index. The index reflects the price level for the supply and demand of individual industrial goods. This index is calculated by the BoJ Research and Statistics Department. Three indexes are contained in this release - the domestic producer index, the export price index and the import price index. It is the domestic index that market players follow. The PPI comprehensively tracks input price pressures; however, the PPI has a track record of increasing and not necessarily feeding through to the CPI because of weak demand. But if an increase in the PPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates.