— Japan May CGPI Revised +0.5%, 1st Y/Y Rise In 17 Months
— Japan June CGPI -0.4% M/M Vs May Revised +0.2%
— Japan CGPI Posts 1st M/M Drop In 8 Months

TOKYO (MNI) – Japan’s corporate goods price index rose 0.5% from a
year earlier in June, marking the second consecutive y/y rise, after
rising a revised 0.5% in May (preliminary +0.4%), data released by the
Bank of Japan on Monday showed.

The increase in May had been the first y/y gain since December
2008, when the index was up 0.9% from a year earlier.

The rise in the June headline index was slightly weaker than the
consensus call for a 0.6% rise.

The index has been recovering steadily from the record 8.5% drop
marked in August 2009, which was the largest year-on-year drop since the
BOJ began compiling the data in 1960.

The overall index continued to be pushed up by a rise in prices of
scrap and waste, which rose 31.9% in June from a year earlier although
its pace of increased slowed from a revised 58.8% rise in May.

This sector pushed up the headline CGPI by 0.16 percentage point in
June, a BOJ official told reporters.

Prices of petroleum and coal products in the domestic market rose
22.8% from a year earlier in June, down from a revised 29.8% rise in
May.

This sector pushed up the headline CGPI by 1.19 percentage
points in June, the official said.

Prices of non-ferrous metals rose 14.0% on year in June (vs.
unrevised +18.0% in May) and those of chemicals and related products
gained 2.3% y/y (vs. revised +3.0% in May).

Non-ferrous metals pushed up the headline CGPI by 0.33 percentage
point in June.

Meanwhile, prices of electric power, gas and water fell 1.4% from a
year earlier in June (vs. unrevised -5.0% in May) and iron and steel
prices fell 0.7% y/y in June (vs. revised -4.3% in May).

On a month-over-month basis, the CGPI was down 0.4% from the
previous month in June, compared with a revised +0.2% in May, showing
the fist m/m drop in eight months.

Prices of petroleum and coal products, scrap and waste, nonferrous
metals as well as chemical and related products contributed to the
month-on-month drop in June.

The number of items whose prices fell from a year earlier totaled
422 (vs. 441 in May), or 49.4% of the basket (51.6% in May), while the
number of items whose prices rose came to 249, or 29.1%, up from 234, or
27.4%, in May, the BOJ official said.

The official said the June CGPI was influenced by the slowdown of
the European economy and concern over slower growth in the U.S.

“Japan’s economy continues to remain solid but the CGPI is affected
by the drop in material prices on the idea that the global economic
recovery is slowing,” the official said.

In its semi-annual Outlook Report released on Apr. 30, the BOJ
said, “the domestic corporate goods price index (CGPI) is expected to be
positive on a year-on-year basis from fiscal 2010 onward due mainly to
the improvement in the aggregate supply and demand balance and to
developments in commodity prices.”

CGPI generally lags about six months after changes in the country’s
output gap, which was estimated by the Cabinet Office to have shrunk to
a negative 4.7% (about Y25 trillion) in the first quarter of 2010.

tokyo@marketnews.com
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