Producer inflation in Japan eased for the sixth straight month in June, hitting a fresh two-year low, as the government's expanded utilities subsidies continued to cap energy costs and many commodities markets are softer on slowing global growth, particularly compared to last year's spike, data released Wednesday by the Bank of Japan showed.

In its quarterly Outlook Report released in April, the BoJ board revised up its forecast for consumer inflation for fiscal 2023 ending next March to 1.8 percent from 1.6 percent projected in January while predicting that inflation will lose some steam from 3.0 percent in fiscal 2022 and fail to be anchored around the bank's 2 percent target in a sustainable manner, averaging 2.0 percent in fiscal 2044 and 1.6 percent in fiscal 2015.

The bank will update its medium-term growth and inflation projections in the next report due on July 28.

The Econoday Consensus Divergence Index stood at minus 38, well below zero, which indicates the Japanese economy is performing worse than expected after outperforming earlier. Excluding the impact of inflation, the index was at minus 44.

The corporate goods price index (CGPI) rose 4.1 percent on the year in June, below the median economist forecast of a 4.4 percent rise (forecasts ranged from 3.9 percent to 5.1 percent gains). It was the 28th consecutive gain but the lowest since 3.8 percent seen in April 2021, following increases of 5.2 percent (revised from 5.1 percent) in May, 6.0 percent (revised from 5.9 percent) in April, 7.4 percent in March, 8.3 percent in February and 9.6 percent in January.

December's 10.6 percent rise 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.

On the month, the domestic CGPI dipped 0.2 percent in June after falling 0.7 percent in May, rising 0.3 percent in April, edging up 0.1 percent in March, falling 0.3 percent in February and slowing from the recent peak of a 1.6 percent rise hit in April 2022. It was lower than the median economist forecast of a 0.2 percent rise (forecasts ranged from a 0.2 percent fall to a 0.8 percent gain).

The decrease was led by lower costs for utilities (electricity, city gas), chemical products, farm produce and lumber.

Producer inflation in Japan is expected to have eased for the sixth straight month in June, slowing to 4.4 percent from 5.1 percent in May, as the government's utilities subsidies continued to cap energy costs and commodities markets were tame on slower global growth. The 4.4 percent rate would be the slowest since the 3.8 percent rise in April 2021. On the month, the corporate goods price index is forecast to post a slight 0.2 percent gain after falling 0.7 percent in May.

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.