| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.1% | -0.2% to 0.3% | 0.0% | -0.4% | -0.3% |
| Year over Year | 7.2% | 6.9% to 7.4% | 7.2% | 8.2% | 8.3% |
Highlights
Producer inflation in Japan eased for the third straight month in March as the government's expanded utilities subsidies continued to cap energy costs and slowing global demand has cooled off commodities markets, data released Wednesday by the Bank of Japan showed.
The Econoday Consensus Divergence Index stood at plus 10, above zero, which indicates the Japanese economy is performing better than expected after outperforming earlier this year. Excluding the impact of inflation, the index was at plus 15.
The corporate goods price index (CGPI) rose 7.2 percent on the year in March, coming in line with the median economist forecast of a 7.2 percent rise (forecasts ranged from 6.9 percent to 7.4 percent gains). It was the 25th consecutive gain following increases of 8.3 percent (revised from 8.2 percent) in February and 9.5 percent in January. December's 10.6 percent rise (revised from 10.5 percent) remains the highest in 42 years, since November 1980, when the index rose 11.8 percent during the 14-month period of double-digit percentage gains through December 1980 in the wake of the 1979 oil crisis triggered by the Iranian Revolution.
The producer costs for electric power, gas and water -- the category that is also driving consumer prices higher rose 26.8 percent on the year in March but the pace of increase continued decelerating from 33.6 percent in February.
Iron and steel maintained a double-digit percentage gain but posted a slower increase of 17.4 percent after rising 18.3 percent the previous month. Those for chemicals continued slowing to a 3.4 percent rise from a 4.7 percent increase. The prices for non-ferrous metals rose just 1.9 percent in March, also decelerating from a 5.3 percent gain in February.
The prices for petroleum and coal products fell 3.2 percent on the year in March after dipping 4.7 percent in February and turning negative in January. The prices for lumber and wood products slumped 14.8 percent from a year earlier for the fifth straight drop after falling 11.5 percent.
Ceramic, stone and clay products have seen upward pressures on their prices until recently but they eased slightly in March to a 12.3 percent rise on the year from
a 12.7 percent gain the previous month. Metal product prices were up 12.5 percent, off slightly from 13.0 percent.
The prices for the beverages and foods -- a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI -- rose 7.0 percent on the year in March after rising 8.0 percent in February. Those for transport equipment (150.9 weight) rose 4.2 percent, down slightly from a 4.7 percent gain the previous month.
On the month, the domestic CGPI was unchanged in March after falling a revised 0.3 percent in February, dipping 0.1 percent in January and slowing from the recent peak of a 1.6 percent rise hit in April 2022. It was just below the median economist forecast of a 0.1 percent rise (forecasts ranged from a 0.2 percent fall to a 0.3 percent gain). Higher costs for fuels (gasoline, diesel and jet fuel), farm produce (beef, eggs, rice) and textile products (shirts, towels) were offset by lower prices for utilities (electricity and gas) as well as lumber and wood products.
The Econoday Consensus Divergence Index stood at plus 10, above zero, which indicates the Japanese economy is performing better than expected after outperforming earlier this year. Excluding the impact of inflation, the index was at plus 15.
The corporate goods price index (CGPI) rose 7.2 percent on the year in March, coming in line with the median economist forecast of a 7.2 percent rise (forecasts ranged from 6.9 percent to 7.4 percent gains). It was the 25th consecutive gain following increases of 8.3 percent (revised from 8.2 percent) in February and 9.5 percent in January. December's 10.6 percent rise (revised from 10.5 percent) remains the highest in 42 years, since November 1980, when the index rose 11.8 percent during the 14-month period of double-digit percentage gains through December 1980 in the wake of the 1979 oil crisis triggered by the Iranian Revolution.
The producer costs for electric power, gas and water -- the category that is also driving consumer prices higher rose 26.8 percent on the year in March but the pace of increase continued decelerating from 33.6 percent in February.
Iron and steel maintained a double-digit percentage gain but posted a slower increase of 17.4 percent after rising 18.3 percent the previous month. Those for chemicals continued slowing to a 3.4 percent rise from a 4.7 percent increase. The prices for non-ferrous metals rose just 1.9 percent in March, also decelerating from a 5.3 percent gain in February.
The prices for petroleum and coal products fell 3.2 percent on the year in March after dipping 4.7 percent in February and turning negative in January. The prices for lumber and wood products slumped 14.8 percent from a year earlier for the fifth straight drop after falling 11.5 percent.
Ceramic, stone and clay products have seen upward pressures on their prices until recently but they eased slightly in March to a 12.3 percent rise on the year from
a 12.7 percent gain the previous month. Metal product prices were up 12.5 percent, off slightly from 13.0 percent.
The prices for the beverages and foods -- a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI -- rose 7.0 percent on the year in March after rising 8.0 percent in February. Those for transport equipment (150.9 weight) rose 4.2 percent, down slightly from a 4.7 percent gain the previous month.
On the month, the domestic CGPI was unchanged in March after falling a revised 0.3 percent in February, dipping 0.1 percent in January and slowing from the recent peak of a 1.6 percent rise hit in April 2022. It was just below the median economist forecast of a 0.1 percent rise (forecasts ranged from a 0.2 percent fall to a 0.3 percent gain). Higher costs for fuels (gasoline, diesel and jet fuel), farm produce (beef, eggs, rice) and textile products (shirts, towels) were offset by lower prices for utilities (electricity and gas) as well as lumber and wood products.
Market Consensus Before Announcement
Producer inflation in Japan is expected to have eased for the third straight month in March as the government's expanded utilities subsidies continued to cap energy costs and slowing global demand has cooled off commodities markets while food suppliers continue to pass higher costs onto customers. The corporate goods price index is seen up 7.2 percent on the year for a 25th consecutive gain following increases of 8.2 percent in February and 9.5 percent in January. December's 10.5 percent rise is a 42-year high.
Definition
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.
Description
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.
