— Japan Dec CGPI Posts 3rd Straight Y/Y Rise; Nov Unrev +0.9%
— Japan Dec CGPI +0.4% M/M Vs Nov Unrev +0.1%
— Japan Dec CGPI Posts 3rd Straight M/M Rise
— Japan CGPI -0.2% Y/Y in 2010 Vs -5.2% in 2009

TOKYO (MNI) – Japan’s corporate goods price index rose 1.2% from a
year earlier in December, marking the third consecutive y/y rise and
sharpest gain in about two years in light of higher international
commodity prices backed by strong Asian demand, data released by the
Bank of Japan Friday showed.

The December rise accelerated from an unrevised 0.9% gain in
November, and was higher than the median forecast in a Market News
International survey for +1.0%.

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

In 2010, CGPI fell 0.2%, improving fast from a record drop of 5.2%
marked in 2009.

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

On a year-on-year basis, the December CGPI was mainly pushed up by
higher prices for iron and steel, nonferrous metals, petroleum and coal
products as well as scrap and waste.

The index 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 2.8% in November. This pushed up the CGPI by
0.39 percentage point.

Petroleum and coal products were up 7.8% in December from a year
earlier after rising a revised 5.6% in November, pushing up the CGPI by
0.46 percentage point.

Prices of iron and steel rose 10.2% on year in December,
accelerating from a 8.9% rise in November and pushing up the CGPI by
0.58 percentage point.

Scrap and waste prices surged 32.5% on year in December,
accelerating from a revised 21.0% in November. This boosted the CGPI by
0.17 percentage point.

Prices of nonferrous metals rose 10.9% on year in December,
accelerating from a 8.6% rise in November. This raised the CGPI by 0.29
percentage point.

From the previous month, the CGPI rose 0.4% in December, posting
the third consecutive m/m rise after rising an unrevised 0.1% in
November.

Month on month, the positive contributions from mainly petroleum
and coal products (+0.18 percentage point) and nonferrous metals (+0.09
pt) offset the negative contributions from electric power, gas and water
(-0.03 pt) and metal products (-0.03 pt).

The number of items whose prices rose from a year earlier totaled
320 in December (vs. 315 in November), or 37.4% of the basket (36.8% in
November), while the number of items whose prices fell came to 366, or
42.8%, compared with 375, or 43.9%, in November, the BOJ official said.

The BOJ in its latest monthly economic report released last month
said, “Domestic corporate goods prices are expected to be on a moderate
uptrend for the time being, reflecting movements in international
commodity prices.”

In its semi-annual Outlook Report released on Oct. 28, the BOJ
board projected that CGPI will rise gradually, posting +0.9% in fiscal
2010 and +0.5% in fiscal 2011.

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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