| Consensus | Consensus Range | Actual | Previous | Revised | |
|---|---|---|---|---|---|
| Month over Month | -0.2% | -0.4% to 0.2% | -0.2% | -0.2% | -0.1% |
| Year over Year | 2.7% | 2.5% to 3.2% | 2.9% | 3.2% | 3.3% |
Highlights
Key points:
--Producer inflation in Japan eased further to a 10-month low of 2.9% on year in June after slowing to 3.3% (revised up from 3.2%) in May from 4.1% in April and 4.3% in the previous two months (the highest since +4.5% in June 2023) amid softer global demand and a renewed government subsidy for gasoline, diesel and heating oil. The prices for petroleum and coal products were down 4.6% on year after edging up 0.8% in May. Utilities costs rose 3.5%, slowing from +6.4%.
--On the upside, the corporate goods price index is supported by farm produce prices (+43.9% vs. +43.5%) while the government's release of reserves of older rice had only a slight downward effect on the prices of the staple in the aftermath of protracted domestic rice shortages.
--The CGPI -0.2% on month vs. -0.1% (revised up from-0.2%) in May. The decrease was led by lower costs for fuels (gasoline, diesel, jet fuel), utilities and metal products, which was partly offset by higher prices for non-ferrous metals and farm produce (pork, polished rice and chicken).
--Producer inflation in Japan eased further to a 10-month low of 2.9% on year in June after slowing to 3.3% (revised up from 3.2%) in May from 4.1% in April and 4.3% in the previous two months (the highest since +4.5% in June 2023) amid softer global demand and a renewed government subsidy for gasoline, diesel and heating oil. The prices for petroleum and coal products were down 4.6% on year after edging up 0.8% in May. Utilities costs rose 3.5%, slowing from +6.4%.
--On the upside, the corporate goods price index is supported by farm produce prices (+43.9% vs. +43.5%) while the government's release of reserves of older rice had only a slight downward effect on the prices of the staple in the aftermath of protracted domestic rice shortages.
--The CGPI -0.2% on month vs. -0.1% (revised up from-0.2%) in May. The decrease was led by lower costs for fuels (gasoline, diesel, jet fuel), utilities and metal products, which was partly offset by higher prices for non-ferrous metals and farm produce (pork, polished rice and chicken).
Market Consensus Before Announcement
Key forecast points:
--Producer inflation in Japan is seen easing further to a 10-month low of +2.7% on year in June vs. +3.2% in May, +4.0% in April and a nearly two-year high of +4.3% in March in light of renewed subsidies for gasoline, diesel and heating oil. Global crude oil prices also slipped back toward the end of June after surging in the middle of the month when the United States joined Israel in attaching Iran’s nuclear facilities.
--On the upside, farm produce prices remain elevated in the aftermath of domestic rice shortages (although easing gradually) and global bird flu outbreaks.
--The corporate goods price index is forecast to post a 0.2% drop on month vs. -0.2% in May (the first drop in nine months) as the recent appreciation of the yen has lowered import costs and fuel prices have eased.
--Producer inflation in Japan is seen easing further to a 10-month low of +2.7% on year in June vs. +3.2% in May, +4.0% in April and a nearly two-year high of +4.3% in March in light of renewed subsidies for gasoline, diesel and heating oil. Global crude oil prices also slipped back toward the end of June after surging in the middle of the month when the United States joined Israel in attaching Iran’s nuclear facilities.
--On the upside, farm produce prices remain elevated in the aftermath of domestic rice shortages (although easing gradually) and global bird flu outbreaks.
--The corporate goods price index is forecast to post a 0.2% drop on month vs. -0.2% in May (the first drop in nine months) as the recent appreciation of the yen has lowered import costs and fuel prices have eased.
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.
