JP: Producer Price Index

Thu Jul 09 18:50:00 CDT 2015

Consensus Actual Previous
Month over Month 0.0% -0.2% 0.3%
Year over Year -2.1% -2.4% -2.1%

June producer price index dropped a greater than anticipated 2.4 percent on the year analysts expected the index to decline 2.1 percent. On the month, the PPI retreated 0.2 percent. Excluding the impact of the consumption tax increase, the index was 2.5 percent lower. The decline in part was from the continuing impact of the drop in petroleum & coal product prices which were down 20.3 percent from a year ago after sinking 21.3 percent in May. Iron & steel were also lower but by 3.1 percent while lumber & wood products were 3.2 percent lower than a year ago.

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.