| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | 0.2% | 0.2% to 0.4% | 0.2% | -0.4% | -0.3% |
| Year over Year | 0.2% | 0.1% to 0.4% | 0.3% | 0.8% | 0.9% |
Highlights
Producer inflation in Japan eased for the 11th straight month in November, slowing to a 0.3 percent rise on the year from a 0.9 percent gain in October, as the government reinforced subsidies to cap utility costs and weaker global demand has calmed commodities markets, data released Tuesday by the Bank of Japan showed.
Corporate goods prices rose 0.2 percent on the month for the first rise in three months, as expected, in light of a rebound in fuel costs and non-ferrous metal prices, which more than offset lower prices for electricity, chemical products and farm produce.
The data also showed business import prices posted their eighth straight year-over-year decline, which has helped ease the upward pressure on consumer prices, but the pace of decline was the slowest in six months.
Econoday's Relative Performance Index (RPI) stood at minus 3, just below zero, which indicates the Japanese economy is performing slightly worse than expected. Excluding the impact of inflation, the RPI was at plus 7.
The corporate goods price index (CGPI) rose 0.3 percent on the year in November, slightly above the median economist forecast of a 0.2 percent rise (forecasts ranged from 0.1 percent to 0.4 percent gains). It is the 33rd consecutive gain but remains the slowest since the 0.4 percent drop seen in February 2021, following increases of 0.9 percent (revised from 0.8 percent) in October, 2.2 percent in September, 3.4 percent in August, 3.6 percent in July, 4.1 percent in June, 5.1 percent in May, 5.8 percent in April, 7.4 percent in March, 8.3 percent in February and 9.5 percent in January.
The 10.6 percent jump 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 0.2 percent in November after falling 0.3 percent (revised from a 0.4 percent dip) in October. Previously, the index fell 0.2 percent in September and rose 0.3 percent in August. It has eased from the recent peak of a 1.6 percent rise hit in April 2022. The latest figure was in line with the median economist forecast of a 0.2 percent rise (forecasts ranged from a 0.2 percent drop to a 0.4 percent gain). The increase was led by a rebound in fuels (gasoline, heavy fuels and jet fuel) and non-ferrous metals (copper, aluminum alloy), offsetting lower prices for electricity, chemicals (chemical fertilizer, xylene and benzene) and farm produce (chicken eggs, pork and dried fish).
The yen stayed weak at an average ¥149.83 to the dollar in November during Tokyo trading hours, little changed from ¥149.53 in October but softer than ¥147.67 in September. It was much weaker than ¥130.20 in January. The appreciation of the yen seen earlier this 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 eighth straight decline on the year but the pace of decrease was the slowest in six months. In yen terms, the index fell 6.1 percent in November after falling a revised 11.9 percent in October. In contract currencies, the index dipped 9.7 percent in October after falling a revised 12.7 percent. The yen-based price increase peaked at 49.5 percent in July 2022.
The producer costs for electric power, gas and water slumped 24.5 percent on the year in November for the fifth straight drop after falling 19.7 percent in October and posting double-digit percentage gains earlier. The government has extended its utilities subsidies until yearend. The program aimed at easing the pain of both households and businesses was launched in January and it was originally scheduled to be phased out at the end of September.
The prices for lumber and wood products fell 16.7 percent from a year earlier for the 12th straight drop after falling 18.2 percent the previous month. Iron and steel prices fell 4.1 percent after falling 4.0 percent the previous month. Those for chemicals dipped 1.9 percent following a 1.8 percent drop.
The prices for foods and beverages -- a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI -- rose 4.0 percent on the year in November after rising 5.0 percent in October. Those for transport equipment (150.9 weight) rose 2.2 percent after a 2.8 percent gain the previous month.
The prices for non-ferrous metals rose 4.6 percent in for the fifth straight increase after rising 3.6 percent. Those for petroleum and coal products also posted the fifth increase in a row, up 3.5 percent on the year in November, following a 0.5 percent rise in October.
The prices for ceramic, stone and clay products eased further to a 12.3 percent rise on the year in November from a 13.2 percent gain the previous month. Metal product prices were up 5.4 percent, also slowing from a 6.0 percent increase.
Corporate goods prices rose 0.2 percent on the month for the first rise in three months, as expected, in light of a rebound in fuel costs and non-ferrous metal prices, which more than offset lower prices for electricity, chemical products and farm produce.
The data also showed business import prices posted their eighth straight year-over-year decline, which has helped ease the upward pressure on consumer prices, but the pace of decline was the slowest in six months.
Econoday's Relative Performance Index (RPI) stood at minus 3, just below zero, which indicates the Japanese economy is performing slightly worse than expected. Excluding the impact of inflation, the RPI was at plus 7.
The corporate goods price index (CGPI) rose 0.3 percent on the year in November, slightly above the median economist forecast of a 0.2 percent rise (forecasts ranged from 0.1 percent to 0.4 percent gains). It is the 33rd consecutive gain but remains the slowest since the 0.4 percent drop seen in February 2021, following increases of 0.9 percent (revised from 0.8 percent) in October, 2.2 percent in September, 3.4 percent in August, 3.6 percent in July, 4.1 percent in June, 5.1 percent in May, 5.8 percent in April, 7.4 percent in March, 8.3 percent in February and 9.5 percent in January.
The 10.6 percent jump 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 0.2 percent in November after falling 0.3 percent (revised from a 0.4 percent dip) in October. Previously, the index fell 0.2 percent in September and rose 0.3 percent in August. It has eased from the recent peak of a 1.6 percent rise hit in April 2022. The latest figure was in line with the median economist forecast of a 0.2 percent rise (forecasts ranged from a 0.2 percent drop to a 0.4 percent gain). The increase was led by a rebound in fuels (gasoline, heavy fuels and jet fuel) and non-ferrous metals (copper, aluminum alloy), offsetting lower prices for electricity, chemicals (chemical fertilizer, xylene and benzene) and farm produce (chicken eggs, pork and dried fish).
The yen stayed weak at an average ¥149.83 to the dollar in November during Tokyo trading hours, little changed from ¥149.53 in October but softer than ¥147.67 in September. It was much weaker than ¥130.20 in January. The appreciation of the yen seen earlier this 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 eighth straight decline on the year but the pace of decrease was the slowest in six months. In yen terms, the index fell 6.1 percent in November after falling a revised 11.9 percent in October. In contract currencies, the index dipped 9.7 percent in October after falling a revised 12.7 percent. The yen-based price increase peaked at 49.5 percent in July 2022.
The producer costs for electric power, gas and water slumped 24.5 percent on the year in November for the fifth straight drop after falling 19.7 percent in October and posting double-digit percentage gains earlier. The government has extended its utilities subsidies until yearend. The program aimed at easing the pain of both households and businesses was launched in January and it was originally scheduled to be phased out at the end of September.
The prices for lumber and wood products fell 16.7 percent from a year earlier for the 12th straight drop after falling 18.2 percent the previous month. Iron and steel prices fell 4.1 percent after falling 4.0 percent the previous month. Those for chemicals dipped 1.9 percent following a 1.8 percent drop.
The prices for foods and beverages -- a category with a high weighting of 144.6 out of 10,000 for the domestic CGPI -- rose 4.0 percent on the year in November after rising 5.0 percent in October. Those for transport equipment (150.9 weight) rose 2.2 percent after a 2.8 percent gain the previous month.
The prices for non-ferrous metals rose 4.6 percent in for the fifth straight increase after rising 3.6 percent. Those for petroleum and coal products also posted the fifth increase in a row, up 3.5 percent on the year in November, following a 0.5 percent rise in October.
The prices for ceramic, stone and clay products eased further to a 12.3 percent rise on the year in November from a 13.2 percent gain the previous month. Metal product prices were up 5.4 percent, also slowing from a 6.0 percent increase.
Market Consensus Before Announcement
Producer inflation in Japan is expected to mark a 33rd straight year-over-year increase, up 0.2 percent in November, but the pace of increase is seen continuing to decelerate for the 11th consecutive month after slowing to 0.8 percent in October from 2.2 percent in September. The corporate goods price index is forecast to post its first rise in three months, up 0.2 percent, after falling 0.4 percent the previous month. The upward pressures from the pandemic-caused supply chain breakdowns and geopolitical risks have waned while slowing global demand is taming commodities markets. In addition, the Japanese government has been keeping a lid on fuel and utility costs with subsidies this year.
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.
