— Japan Nov Total CSPI Posts 26th Straight Y/Y Drop
— Japan Nov Core CSPI (Ex Intl Transport) -1.2% Y/Y; Oct -1.3%
— Japan Nov Total CSPI +0.1% M/M Vs Oct revised -0.2%
— Japan Nov Core CSPI 0.0% M/M Vs Oct -0.1%

TOKYO (MNI) – Japan’s corporate service price index fell 1.1% in
November from a year earlier, the 26th consecutive year-on-year drop,
with the pace of decline decelerating from the revised 1.3% fall in
October, Bank of Japan data released on Monday showed.

The total CSPI, which stood at 96.6 in November against 100 in the
2005 base year, was down up 0.1% from the previous month, posting the
first rise since +0.1% in June.

The pace of year-on-year drop slowed in November from October as
the upward contributions from transportation (+0.05 point), other
services (+0.04 pt) and leasing and rental (+0.03 pt) more than offset
the downward contributions from information and communications (-0.02),
advertising services (-0.00%) and real estate services (-0.00%).

The downward pressure on prices has eased generally since total
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.
However, total CSPI as level out since early summer, posting a -1.1%
reached each month since July, expect for October’s 1.3% decline. Total
CSPI had risen to 0.7% in May, its recent peak.

Core CSPI excluding international transportation, a fairly new
measure free of volatile factors, dropped 1.2% year-on-year in November
posting the 25th consecutive y/y decline, after falling 1.3% in October.

Month-on-month, the core CSPI showed no change in November, after
falling 0.1% in October.

The index for transportation, which accounts for about 21% of the
total index weighting and thus has a large impact on the headline index,
was down 0.1% year-on-year in November after falling 0.4% in October.

Within this category, road freight transportation fees fell 0.1%
year-on-year (vs. -0.4. in the previous month), while ocean freight
transportation costs fell 2.0% (vs. -3.5% the previous month).

The index for advertising services (weighting: 6.85%), which
includes TV commercials, fell 0.6% on the year, following a 0.5% drop in

The index for information and communications, including software
development and mobile phone charges (weighting: 21.65%), dropped 0.9%
on the year after falling 0.8% in the previous month.

The index for finance and insurance (weighting: 5.91%) fell 0.8% on
year after declining 0.8% 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.

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.

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.

** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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