— Japan Aug Total CSPI Posts 35th Straight Y/Y Drop

TOKYO (MNI) – Japan’s corporate service price index fell 0.4% in
August from a year earlier, the 35th consecutive year-on-year drop
following a revised 0.3% fall (preliminary -0.5%) in July, Bank of Japan
data released on Tuesday showed.

The slightly larger year-on-year drop in August was mainly due to
lower costs for transportation, leasing and rental as well as
advertising services.

Uncertainty about global economic growth continues to exert
downward pressure on corporate service prices while demand arising from
reconstruction of Japan’s earthquake-hit northeastern region is
providing some support to CSPI, a BOJ official told reporters.

July’s 0.3% drop was the smallest since October 2008, when the
index was down 0.2% on the year.

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 96.1 in August against 100 in the 2005
base year, down 0.4% from the previous month after being unchanged in
July.

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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