JP: Producer Price Index

July 11, 2016 06:50 CDT

Consensus Actual Previous Revised
Month over Month -0.1% -0.1% 0.2% 0.1%
Year over Year -4.2% -4.2% -4.2% -4.3%

June producer prices slipped 0.1 percent on the month and tumbled 4.2 percent from a year ago as anticipated. The annual change has been negative since April 2015 as Japan continues to languish in deflation. Petroleum and coal products continue to weigh on the index, sinking 21.0 percent from a year ago. Also exerting downward pressure was nonferrous metals, down 17.6 percent. Chemicals & related products were 8.7 percent lower from a year ago.

According to the Bank of Japan, the PPI is expected to continue to decline for the time being thanks to movements in international commodity prices.

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.