JP: Producer Price Index

April 11, 2017 06:50 CDT

Consensus Actual Previous Revised
Year over Year 1.4% 1.4% 1.0% 1.1%
Month over Month 0.2% 0.2% 0.3%

Japan's producer price index rose 1.4 percent on the year in March after an increase of 1.1 percent in February, in line with the consensus forecast of 0.3 percent. Year-on-year growth in the index has been trending higher since mid-2016 and is now at its highest level since late 2014. The index rose 0.2 percent on the month, after an increase of 0.3 percent in January, just below the consensus forecast.

The month-on-month increase in February reflected higher prices for petroleum and coal products (up 2.4 percent on the month) and electric power, gas and water(up 1.2 percent). Most other categories, however, recorded only modest increases or were flat on the month.

The Producer Price Index (PPI) is a measure of the average price level for a fixed basket of capital and consumer goods paid by producers. Analysts look to the PPI for early signs of inflation in the production process.

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.