— Japan CGPI +0.4% Y/Y Vs Apr Revised -0.1%
— Japan May CGPI +0.1% M/M Vs Apr Revised +0.5%
— Japan CGPI Posts 6th Straight M/M Rise

TOKYO (MNI) – Japan’s corporate goods price index rose 0.4% from a
year earlier in May, marking the first on-year rise in 17 months and
reversing from a revised -0.1% in April, data released by the Bank of
Japan on Thursday showed.

The +0.4% rise in May was the first y/y gain since December 2008,
when the index was up 0.9% from a year earlier.

The rise in the headline index was slightly bigger than the
consensus call of a 0.2% rise.

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

The overall index was pushed up by a sharp rise in prices of scrap
and waste, which surged 58.8% in May from a year earlier, compared with
a revised 76.7% rise in April.

This sector pushed up the headline CGPI by 0.27 percentage point in
May, a BOJ official said.

Material prices have continued to rise due to the global economic
recovery driven by growth in China and other emerging countries.

Prices of petroleum and coal products in the domestic market rose
30.1% from a year earlier in May, up from a revised 28.5% rise in April.

This sector pushed up the headline CGPI by 1.52 percentage points
in May, the official said.

Prices of non-ferrous metals rose 18.0% on year in May (vs. revised
+24.2% in April) and those of chemicals and related products gained 2.9%
y/y (vs. revised +2.1% in April).

Non-ferrous metals pushed up the headline CGPI by 0.42 percentage
point in May.

Meanwhile, electric power, gas and water fell 5.0% from a year
earlier in May (vs. unrevised -12.0% in April) and iron and steel prices
fell 4.8% y/y in May (vs. revised -7.4% in April).

On a month-over-month basis, the CGPI was up 0.1% from the previous
month in May, compared with revised +0.5% in April, showing the sixth
consecutive m/m rise.

The number of items whose prices fell from a year earlier totaled
445 (vs. 460 in April), or 52.0% of the basket (54.4% in April), while
the number of items whose prices rose came to 228, or 26.7%, up from
218, or 25.5%, in April, the BOJ official said.

In its semi-annual Outlook Report released on Apr. 30, the BOJ
said, “the domestic corporate goods price index (CGPI) is expected to be
positive on a year-on-year basis from fiscal 2010 onward due mainly to
the improvement in the aggregate supply and demand balance and to
developments in commodity prices.”

CGPI generally lags about six months after changes in the country’s
output gap, which was estimated by the Cabinet Office to have shrunk to
a negative 4.8% (about Y25 trillion) in the first quarter of 2010.

tokyo@marketnews.com
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