| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.2% | 0.0% to 0.4% | 0.3% | 0.1% | |
| Year over Year | 3.3% | 3.1% to 3.6% | 3.2% | 3.6% | 3.4% |
Highlights
Producer inflation in Japan eased for the eighth straight month in August, staying at an over two-year low, as the government's utility subsidies continued to cut electricity and natural gas costs and some commodity prices remained depressed or posted slower gains compared to last year's spike, data released Wednesday by the Bank of Japan showed.
Corporate goods prices posted their second straight monthly rise, reflecting the recent rise in global energy markets and a sustained rebound in non-ferrous metal prices.
The data also showed business import prices posted the fifth straight year-over-year decline, which is expected to ease the burden of households later this year.
Econoday's Relative Performance Index stood at minus 37, far below zero, which indicates the Japanese economy is performing much worse than expected. Excluding the impact of inflation, the RPI was at minus 50.
The corporate goods price index (CGPI) rose 3.2 percent on the year in August, just below the median economist forecast of a 3.3 percent rise (forecasts ranged from 3.1 percent to 3.6 percent gains). It was the 30th consecutive gain and the slowest pace of increase since 1.0 percent seen in March 2021, following increases of 3.4 percent (revised from 3.6 percent) in July, 4.1 percent (revised from 4.3 percent) in June, 5.1 percent (revised from 5.3 percent) in May, 5.8 percent (revised from 6.1 percent) in April in April, 7.4 percent in March, 8.3 percent in February and 9.6 percent in January.
The 10.6 percent rise in December 2022 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 rose 0.3 percent in August after rising 0.1 percent in July and falling 0.1 percent in June, dipping 0.7 percent in May and rising 0.3 percent in April, and slowing from the recent peak of a 1.6 percent rise hit in April 2022. It was slightly higher than the median economist forecast of a 0.2 percent rise (forecasts ranged from being flat to a 0.4 percent gain). The month-over-month increase was led by higher costs for fuels (gasoline, diesel), chemicals (benzene, etc.), non-ferrous metals (copper, etc.) and electrical equipment.
The yen depreciated to an average ¥144.77 to the dollar in August from ¥141.21 in July during Tokyo trading hours and was much weaker than ¥130.20 in January and ¥135.24 seen a year earlier. Combined with generally commodities markets, an earlier appreciation of the yen since late last year had helped lower import costs from elevated levels. The dollar briefly surged to a 32-year high of ¥151.94 in October 2022 but Japan's second wave of massive yen-buying forex intervention pushed it down to a low of ¥143.55 in the same month.
The CGPI's import price index posted the fifth straight decline on the year. In yen terms, the index fell 11.8 percent in August after dropping a revised 14.4 percent in July. In contract currencies, the index dipped 15.9 percent in August after dipping a revised 16.0 percent in July. The yen-based price increase peaked at a revised 49.5 percent in July 2022. The dollar appreciated 2.5 percent on the month against the yen after being unchanged in July and firming 2.8 percent in June, BoJ data showed.
The producer costs for electric power, gas and water slumped 10.9 percent on the year in August after falling 3.6 percent in July, rising 4.4 percent in June and posting double-digit percentage gains earlier. The government began providing utilities subsidies in January and the program was originally scheduled to end in September but in the face of surging energy markets, the government has announced it would be extended throughout the year.
The prices for foods and beverages -- a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI -- rose 5.9 percent on the year in August after rising 6.3 percent in July. Those for transport equipment (150.9 weight) rose 2.6 percent after a 2.6 percent gain the previous month.
Iron and steel prices posted a slower increase of 2.2 percent after rising 3.9 percent the previous month. Those for chemicals fell 2.8 percent, with the pace of decline easing from a 3.9 percent drop. The prices for non-ferrous metals rose 6.7 percent in August after rebounding 5.6 percent in July and falling 0.5 percent in June.
The prices for petroleum and coal products rose 7.5 percent on the year in August after rebounding 1.8 percent in July and dipping 2.5 percent in June. The prices for lumber and wood products plunged 22.1 percent from a year earlier for the 10th straight drop after falling 22.8 percent in July.
The prices for ceramic, stone and clay products eased further to a 15.5 percent rise on the year in August from a 15.9 percent gain the previous month. Metal product prices were up 8.0 percent after rising 8.1 percent.
Corporate goods prices posted their second straight monthly rise, reflecting the recent rise in global energy markets and a sustained rebound in non-ferrous metal prices.
The data also showed business import prices posted the fifth straight year-over-year decline, which is expected to ease the burden of households later this year.
Econoday's Relative Performance Index stood at minus 37, far below zero, which indicates the Japanese economy is performing much worse than expected. Excluding the impact of inflation, the RPI was at minus 50.
The corporate goods price index (CGPI) rose 3.2 percent on the year in August, just below the median economist forecast of a 3.3 percent rise (forecasts ranged from 3.1 percent to 3.6 percent gains). It was the 30th consecutive gain and the slowest pace of increase since 1.0 percent seen in March 2021, following increases of 3.4 percent (revised from 3.6 percent) in July, 4.1 percent (revised from 4.3 percent) in June, 5.1 percent (revised from 5.3 percent) in May, 5.8 percent (revised from 6.1 percent) in April in April, 7.4 percent in March, 8.3 percent in February and 9.6 percent in January.
The 10.6 percent rise in December 2022 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 rose 0.3 percent in August after rising 0.1 percent in July and falling 0.1 percent in June, dipping 0.7 percent in May and rising 0.3 percent in April, and slowing from the recent peak of a 1.6 percent rise hit in April 2022. It was slightly higher than the median economist forecast of a 0.2 percent rise (forecasts ranged from being flat to a 0.4 percent gain). The month-over-month increase was led by higher costs for fuels (gasoline, diesel), chemicals (benzene, etc.), non-ferrous metals (copper, etc.) and electrical equipment.
The yen depreciated to an average ¥144.77 to the dollar in August from ¥141.21 in July during Tokyo trading hours and was much weaker than ¥130.20 in January and ¥135.24 seen a year earlier. Combined with generally commodities markets, an earlier appreciation of the yen since late last year had helped lower import costs from elevated levels. The dollar briefly surged to a 32-year high of ¥151.94 in October 2022 but Japan's second wave of massive yen-buying forex intervention pushed it down to a low of ¥143.55 in the same month.
The CGPI's import price index posted the fifth straight decline on the year. In yen terms, the index fell 11.8 percent in August after dropping a revised 14.4 percent in July. In contract currencies, the index dipped 15.9 percent in August after dipping a revised 16.0 percent in July. The yen-based price increase peaked at a revised 49.5 percent in July 2022. The dollar appreciated 2.5 percent on the month against the yen after being unchanged in July and firming 2.8 percent in June, BoJ data showed.
The producer costs for electric power, gas and water slumped 10.9 percent on the year in August after falling 3.6 percent in July, rising 4.4 percent in June and posting double-digit percentage gains earlier. The government began providing utilities subsidies in January and the program was originally scheduled to end in September but in the face of surging energy markets, the government has announced it would be extended throughout the year.
The prices for foods and beverages -- a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI -- rose 5.9 percent on the year in August after rising 6.3 percent in July. Those for transport equipment (150.9 weight) rose 2.6 percent after a 2.6 percent gain the previous month.
Iron and steel prices posted a slower increase of 2.2 percent after rising 3.9 percent the previous month. Those for chemicals fell 2.8 percent, with the pace of decline easing from a 3.9 percent drop. The prices for non-ferrous metals rose 6.7 percent in August after rebounding 5.6 percent in July and falling 0.5 percent in June.
The prices for petroleum and coal products rose 7.5 percent on the year in August after rebounding 1.8 percent in July and dipping 2.5 percent in June. The prices for lumber and wood products plunged 22.1 percent from a year earlier for the 10th straight drop after falling 22.8 percent in July.
The prices for ceramic, stone and clay products eased further to a 15.5 percent rise on the year in August from a 15.9 percent gain the previous month. Metal product prices were up 8.0 percent after rising 8.1 percent.
Market Consensus Before Announcement
Producer inflation in Japan is expected to ease for an eighth straight month in August to a 3.3 percent increase (the lowest since 1.0% in March 2021) after a 3.6 percent gain in July as the government's expanded utilities subsidies continued to cap energy costs, mitigating the impact of food price markups. The corporate goods price index is forecast to post its second straight monthly rise in August, up 0.2 percent, following a 0.1 percent rise in June, reflecting the recent rise in global energy prices.
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.
