— Japan Dec Corp Goods Prices Unrevised +1.2% Y/Y
— Japan Jan CGPI Posts 4th Straight Y/Y Rise
— Japan Jan CGPI +0.5% M/M Vs Dec Unrevised +0.4%
— Japan Jan CGPI Posts 4th Straight M/M Rise

TOKYO (MNI) – Japan’s corporate goods price index rose 1.6% from a
year earlier in January, marking the fourth consecutive y/y rise and the
largest gain in more than two years in light of rising international
commodity prices backed by strong Asian demand, data released by the
Bank of Japan Thursday showed.

The January rise accelerated from an unrevised 1.2% gain in
December, and was higher than the median forecast in a Market News
International survey for +1.4%.

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

The official said the BOJ is monitoring closely whether the rise in
international commodity prices will continue and whether they will
filter through to final goods prices in Japan.

He also noted that some firms are passing along higher costs on to
final goods prices.

The official added that Japan’s terms of trade are expected to
worsen in the coming months, which requires the BOJ to watch the impact
on the economy closely.

On a year-on-year basis, the January CGPI was mainly pushed up by
higher prices for petroleum and coal products, iron and steel, textile
products 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
drops since the BOJ began compiling the data in 1960.

In May 2010, the CGPI rose 0.5%, marking the first y/y gain since
December 2008. It was followed by a 0.4% rise in June and 0.1% drop in
July.

In today’s data, prices of processed foodstuffs were up 3.3% from a
year earlier after rising 3.0% in December. This pushed up the CGPI by
0.40 percentage point.

Petroleum and coal products were up 11.3% in January from a year
earlier after rising a revised 8.4% in December, pushing up the CGPI by
0.68 percentage point.

Prices of iron and steel rose 11.6% on year in January,
accelerating from a 10.2% rise in December and pushing up the CGPI by
0.66 percentage point.

Scrap and waste prices surged 26.7% on year in January, slowing
from a revised 33.0% in December. This boosted the CGPI by 0.15
percentage point.

Prices of nonferrous metals rose 7.6% on year in January, also
decelerating from a 10.9% rise in December. This raised the CGPI by 0.21
percentage point.

From the previous month, the CGPI rose 0.5% in January, posting the
fourth consecutive m/m rise after rising an unrevised 0.4% in December.

The January month-on-month gain was the largest since July 2009,
when the index was also up 0.5%.

Month on month, positive contributions that came from petroleum and
coal products (+0.38 percentage point), chemicals and related products
(+0.09 pt) and nonferrous metals (+0.05 pt) offset negative
contributions from agriculture, forestry and fishery products (-0.08
pt), electric power, gas and water (-0.03 pt) and information and
communication equipment (-0.02 pt).

The number of items whose prices rose from a year earlier totaled
321 in January (vs. 319 in December), or 37.5% of the basket (37.3% in
December), while the number of items whose prices fell came to 369, or
43.2%, compared with 372, or 43.5%, in December, the BOJ official said.

The BOJ said in its latest economic report released in January that
“the three-month rate of change in domestic corporate goods prices is
rising moderately, 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 be on an uptrend 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 shrunk to -3.1% in the July-September quarter
from -4.0% in April-June.

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

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