| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | 0.5% | 0.2% to 2.1% | 0.8% | -0.1% | 0.1% |
| Year over Year | 2.2% | 1.9% to 3.8% | 2.6% | 2.0% | 2.1% |
Highlights
Producer inflation in Japan accelerated at a much faster pace in March, up 2.6% vs. a revised 2.1% in February, as rising tensions in the Middle East pushed oil product prices higher following three consecutive months of deceleration through February on easing farm produce prices. The year-on-year decline in the costs for refined petroleum products decelerated sharply. Supply disruptions and strong demand have pushed up copper prices, keeping non-ferrous metals more than 30% above year-earlier levels, but the rate of increase in the metal group continued to ease.
The 2.6% y/y increase in the corporate goods price index is the highest since 2.7% recorded in both November and October, when the prices charged among firms were on a gradual downtrend after having peaked at 4.3% in February (the highest since 4.5% in June 2023). On the month, too, the Mideast conflict that broke out late February boosted the prices for gasoline, diesel and heavy fuels, having a widespread impact on land/ ocean transportation and factories.
Details:
Japan March corporate goods (producer) prices +2.6% y/y (Feb revised to +2.1%); median forecast +2.1%
Japan March producer prices +0.8% m/m, 7th straight rise (Feb revised to +0.1%); median forecast +0.5%
Japan March CGPI m/m rise led by fuels, chemical products, scrap irons/coppers, utilities
Japan producer inflation jumps in March in light of spike in global crude oil prices, which led to smaller y/y drops in domestic oil/coal products
Japan March producer inflation y/y rise led by easing but still high farm produce prices (+18.9% vs. Feb revised to +18.3% from +18.5%)
Japan March CGPI: key energy prices continue falling; crude oil/coal products (-7.3% vs. Feb -11.7)
Japan March CGPI: non-ferrous metals +31.1% (Feb revised to +32.6% from +32.5%)
Market Consensus Before Announcement
Japan’s producer inflation, measured by the corporate goods price index (CGPI), is expected to accelerate slightly in March as rising tensions in the Middle East pushed oil product prices higher following three consecutive months of deceleration through February on easing farm produce prices.
The CGPI is projected to rise 2.2 percent from a year earlier in March, with the pace of increase ticking up from a nearly two-year low of 2.0 percent in February. The annual rate would remain the lowest since April 2024, when the CGPI rose 1.2 percent, and extend the streak of increases to 61 consecutive months.
Producer inflation had been easing ahead of March. The CGPI slowed to 2.0 percent in February from 2.3 percent in January and 2.4 percent in December, as domestic rice supply shortages eased, fuel prices fell more than 10 percent year over year, and declines in utility prices deepened.
Gasoline and other oil product prices rose sharply in March amid escalating tensions in the Middle East following U.S.-Israeli attacks on Iran in late February. But the government’s subsidies are seen helping stabilize prices at levels roughly in line with a year earlier. The impact of the Middle East situation also appears limited to certain sectors, including chemical products.
In contrast to the uptrend in oil prices, rice prices have shown signs of a notable slowdown. In Tokyo’s consumer price index, rice prices rose 8.3% in March, sharply down from an 18.2 percent increase in February.
On a month-on-month basis, the CGPI is expected to rise 0.5 percent in March after slipping 0.1 percent in February.
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.