— Japan Aug Total CSPI Posts 23rd Straight Y/Y Drop
— Japan Aug Core CSPI (Ex Intl Transport) -1.1% Y/Y; July Rev -1.1%
— Japan Aug Total CSPI -0.4% M/M Vs July Rev -0.3%
— Japan Aug Core CSPI -0.3% M/M Vs July Revised -0.2%

TOKYO (MNI) – Japan’s corporate service price index fell 1.1% in
August from a year earlier, the 23rd consecutive year-on-year drop, with
the pace of decline being unchanged from a revised 1.1 fall in July but
accelerating slightly from the 1.0% drop in June, Bank of Japan data
released on Monday showed.

The total CSPI, which stood at 96.8 in August against 100 in the
2005 base year, was down 0.4% from the previous month after falling a
revised 0.3% in July (preliminary -0.4%). It was the second consecutive
m/m drop.

The pace of year-on-year drop was unchanged in August vs. July
because larger y/y drops in “other services” (civil engineering and
architectural services, hotels and temporary employment agency services)
were offset by smaller y/y drops in transportation costs including
highway tolls and ship chartering fees.

The downward pressure on prices has eased generally since the CSPI
hit a record drop of -3.8% in August 2009, which was the largest decline
since the BOJ began compiling CSPI data in January 1985.

Core CSPI excluding international transportation, a fairly new
measure free of volatile factors, dropped 1.1% year-on-year in August
after falling by a revised 1.1% in July (preliminary -1.2%).

Month-on-month, the core CSPI was down 0.3% in August after falling
a revised 0.2% in July (preliminary -0.1%). It was the second
consecutive m/m drop.

The index for transportation, which accounts for about 21% of the
index weighting, was down 0.1% year-on-year in August after falling a
revised 0.2% in July.

Within this category, ship chartering fees fell 7.7% year-on-year
(vs. -8.8% in the previous month), while ocean freight transportation
costs dipped 2.5% (vs. unrevised -1.8% the previous month).

The index for advertising services (weighting: 6.85%), which
includes TV commercials, fell 1.0% on the year, following an unrevised
1.3% fall in July.

The index for information and communications, including software
development and mobile phone charges (weighting: 21.65%) dropped 0.6% on
the year, unchanged from a revised -0.6% in the previous month.

The index for finance and insurance (weighting: 5.91%) slipped 1.3%
on the year after falling a revised 1.2% in the previous month.

The corporate services price index tracks prices for a wide range
of corporate services, ranging from finance and insurance charges to the
cost of shipping goods by road rail, air or sea.

It also includes software development costs, telecommunications
charges and legal and accounting fees.

Last year, the BOJ changed the base year for its corporate service
price index to 2005 from 2000, which takes place every five years, while
reshuffling the services covered in the data to reflect more high-tech
and diversified business activity, effective September 2009 data.

Under the 2005 base year, the total CSPI hit a recent peak of 102.0
in July 2008, when demand from China to import iron ore and coal ahead
of the Beijing Olympics peaked, pushing up global ship chartering and
freight charges.

By contrast, the core CSPI was largely leveling off in several
months through July 2008, when it was only at 99.6.

The change is designed to boost the accuracy of the indicator
following technology innovation. Both the government and the BOJ
routinely change the base year for the price data they compile to
mitigate the upward bias typically found the further the data is from
the base year.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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