— Japan March CGPI Posts 6th Straight Y/Y Rise; Feb +1.7%
— Japan March CGPI +0.6% M/M Vs Feb +0.2%
— Japan March CGPI Posts 6th Straight M/M Rise

TOKYO (MNI) – Japan’s corporate goods price index rose 2.0% from a
year earlier in March, marking the sixth consecutive y/y rise and
remaining the largest gain in more than two years on rising commodity
prices, data released by the Bank of Japan on Wednesday showed.

The March rise accelerated from a 1.7% gain in February and was
higher than the median forecast in a Market News International survey,
which called for +1.9%.

The March y/y rise remained the largest since November 2008, when
the index was up 2.4%, a BOJ official told reporters.

“We haven’t seen any (significant) impact of the March 11
earthquake on corporate price settings,” the BOJ official said, adding
that prices for lumber and wood products rose only slightly in the
aftermath of the disaster.

The BOJ needs to pay attention to April prices, when domestic firms
generally revise their prices at the start of the new fiscal year, he
said.

On a year-on-year basis, the March CGPI rise was led by higher
prices for petroleum and coal products, iron and steel, nonferrous
metals and processed foodstuffs.

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

In May 2010, the CGPI rose a revised 0.4%, marking the first y/y
gain since December 2008. It was followed by a 0.4% rise in June and a
revised 0.2% drop in July.

In today’s data, prices of processed foodstuffs were up 3.7% from a
year earlier after rising 3.4% in February. This pushed up the CGPI by
0.44 percentage point.

Petroleum and coal products were up 17.3% in March from a year
earlier after rising 11.7% in February, pushing up the CGPI by 1.05
percentage points.

Prices of iron and steel rose 11.0% on year in March after a 11.6%
rise in February and pushing up the CGPI by 0.63 percentage point.

Scrap and waste prices rose 9.2% on year in March, slowing from a
23.6% rise in February.

Prices of nonferrous metals rose 9.8% on year in March,
decelerating from a 12.3% rise in February. This raised the CGPI by 0.27
percentage point.

From the previous month, the CGPI rose 0.6% in March, posting the
sixth consecutive m/m rise after rising 0.2% in February.

The March m/m rise was the highest since July 2008, when the index
was up 2.2% form the previous month.

Month on month, positive contributions in March came from petroleum
and coal products (+0.40 point), chemicals and related products (+0.05),
iron and steel (+0.03), processed foodstuffs (+0.0.3) and textile
products (+0.01).

Meanwhile, negative contributions came from scrap and waste (-0.01
point) and nonferrous metals (-0.01).

The number of items whose prices rose from a year earlier totaled
355 in March (vs. 329 in February), or 41.5% of the basket (38.5% in
February), while the number of items whose prices fell came to 351, or
41.1%, compared with 373, or 43.6%, in February, the BOJ official said.

He added that it is the first time since May 2009 that the share of
rising prices has exceeded that of falling prices.

The BOJ’s latest economic report released on April 7 said, “The
three-month rate of change in domestic corporate goods prices is rising,
mainly due to the increase in international commodity prices.”

As for the outlook for CGPI, the BOJ said, ” Domestic corporate
goods prices are expected to continue rising for the time being,
reflecting movements in international commodity prices.”

CGPI recorded y/y falls from January 2009 to April 2010 in the
aftermath of the global financial crisis and recession. It hit a record
drop of -8.5% in August 2009.

CGPI generally lags about six months after changes in the country’s
output gap (excess capacity vs. demand), which is estimated by the
Cabinet Office to have widened to -3.8% in the October-December quarter
from -1.0% in July-September.

The Bank of Japan’s overseas commodity index — comprising 17 items
including crude oil, copper, gold, wheat and beef — rose 35.6% y/y to
209.0 in March, against 100.0 for the 2005 base year. It was the highest
level since 217.6 marked in July 2008.

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

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