— Japan Sep Total CSPI Posts 36th Straight Y/Y Drop

TOKYO (MNI) – Japan’s corporate service price index fell 0.1% in
September, marking the 36th consecutive year-on-year drop, but the pace
of declined decelerated from a revised 0.3% fall (preliminary -0.4%) in
August, Bank of Japan data released on Wednesday showed.

The September figure was the smallest y/y drop in the current
downward cycle that began in October 2008 (-0.2%). The total CSPI last
rose in September 2008 (+0.9%).

The smaller year-on-year drop in September was due to higher costs
for transportation, other services (civil engineering), advertising as
well as information and communications (mobile phone charges), which
outpaced weak office rental prices.

“Looking ahead, the key is how reconstruction of the earthquake-hit
northeastern region will push up service prices and whether uncertainty
over the global economy will prompt firms to cut service prices,” a BOJ
official told reporters.

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

The CSPI, which stood at 96.3 in September against 100 in the 2005
base year, rose 0.1% from the previous month, posting the first m/m rise
in three months after falling 0.3% in August.

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.

In 2009, 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.

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

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MMJBJ$]