— Japan Apr Total CSPI Posts 19th Straight Y/Y Drop
— Japan Apr Core CSPI (Ex Intl Transport) -1.5% Y/Y; Mar Rev -1.4%
— Japan Apr Total CSPI -0.4% M/M Vs Mar Unrevised +0.5%
— Japan Apr Core CSPI -0.7% M/M Vs Mar Unrevised +0.5%

TOKYO (MNI) – Japan’s corporate service price index fell 1.1% in
April from a year earlier, posting the 19th consecutive year-on-year
drop, with the pace of decline slowing slightly from March, Bank of
Japan data released Wednesday showed.

April’s decline decelerated from a revised 1.2% fall in March
(preliminary -1.1%).

The downward pressure on prices has eased steadily since the CSPI
hit 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 97.5 in April against 100 in the
2005 base year, was down 0.4% from the previous month after rising an
unrevised 0.5% in March. It was the first month-on-month drop in three
months.

CSPI excluding international transportation, a fairly new measure
which can be used as a measure of “core CSPI” that is free of volatile
factors, dropped 1.5% year-on-year in April after falling by a revised
1.4% in March (preliminary -1.3%).

Month-on-month, the core CSPI was down 0.4% in April after rising
0.5% in March. It was the first m/m drop in three months.

International shipping charges can fluctuate sharply due to changes
in demand from China and other emerging countries as well as due to yen
moves against the dollar.

In April, the y/y drop in total CSPI compared with March was due
mainly to the negative contribution from “other services” (civil
engineering, architectural services, plant engineering and building
maintenance), as well as leasing and rental and real estate services.

Meanwhile, the positive contribution to the index came from
information and communications, transportation and finance and
insurance.

The index for transportation (weighting: 210.3 vs. 1,000 for the
overall index) was up 0.7% year-on-year in April after being flat in
March.

Within this category, ship chartering fees fell 8.3% year-on-year
(vs. -10.6% in the previous month), while ocean freight transportation
costs rose 15.1% (vs. +16.2% the previous month).

The index for advertising services (weighting: 68.5 vs. 1,000 for
the overall index), which includes TV commercials, fell 2.7% on the
year, with the pace of decline slowing from -2.8% in the previous month.

The index for information and communications, including software
development (weighting 216.5 vs. 1,000 for the overall index) fell 0.8%
on the year, with the pace of declined slowing from -2.1% in the
previous month.

The index for finance and insurance (weighting 59.1 vs. 1,000 for
the overall index) dropped 0.8% on the year after falling an unrevised
1.3% in the previous month.

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.

The BOJ has 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.

By contrast, the core CSPI was largely leveling off in several
months through July 2008, when it was only at 99.6.

The change is designed to boost the accuracy of the indicator
following technology innovation. Both the government and the BOJ
routinely change the base year for the price data they compile to
mitigate the upward bias typically found the further the data is from
the base year.

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

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