|Month over Month||0.2%||0.3%||0.1%|
|Year over Year||-2.2%||-2.1%||-2.1%|
May producer prices were up 0.3 percent on the month but dropped 2.1 percent from a year ago. The PPI also was down 2.1 percent in April. The last time the PPI dropped as much was in July 2012. Adjusted for the sales tax, the PPI was up 0.3 percent on the month and slid 2.0 percent on the year. Still weighing heavily on the annual change was petroleum & coal products they plunged 21.1 percent. However, many other sub-categories declined as well. They included iron & steel, chemicals & related products and electronic components & devices to mention just a few.
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.
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