— Japan Oct Corporate Service Prices +0.1% Y/Y Vs Sep Flat
— Japan Oct Total CSPI Post 1st Y/Y Rise in 37 Months

TOKYO (MNI) – Japan’s corporate service price index rose 0.1% in
October, marking the first year-on-year rise in 37 months after being
unchanged in September (revised from a preliminary -0.1%) and falling
0.3% in August, Bank of Japan data released on Friday showed.

The October figure was pushed up by higher prices for “other
services” (plant engineering and temporary employment services),
transportation, real estate as well as advertising services.

The October rise was the first since September 2008, when the index
was up 0.9%.

“The October CSPI rose from a year earlier but it remains uncertain
whether the index will continue rising, judging from the slowing global
economy and effects of the strong yen (which lowers import costs),” a
BOJ official said.

Goods prices among firms continue falling and downward pressures on
prices may grow further with a time lag as firms are likely to continue
cutting costs, he said.

Meanwhile, core CSPI excluding international transportation, a
measure free of volatile factors, remained on a downtrend, falling 0.1%
on year in October after dropping at the same rate in September.

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 total CSPI, which stood at 96.5 in October against 100 in the
2005 base year, rose 0.1% from the previous month, posting the second
consecutive m/m rise after rising 0.2% in September.

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
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