Japan December PPI +0.3% m/m (expected +0.4%) 3.8% y/y (expected 3.8%)

Japan Producer Prices, December 2024

+0.3% m/m

• expected +0.4%, prior 0.3%

3.8% y/y

• expected 3.8%, prior 3.7%

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USD/JPY has dribbled off a few tics. The data is not unsupportive of a rate hike from the BoJ next week (January 23 and 24 meeting).

Earlier:

ICYMI: Nomura are now forecasting a Bank of Japan (BoJ) interest rate hike next week

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The Producer Price Index (PPI) in Japan is also known as the Corporate Goods Price Index (CGPI)

• its a measure of the average change over time in the selling prices received by domestic producers for their output
• is calculated by the Bank of Japan

Unlike the Consumer Price Index (CPI), which measures the price change that consumers see for a basket of goods and services, the CGPI focuses on the change in the prices of goods sold by companies.

The PPI reflects some of cost pressures faced by producers

• its based on a basket of goods that represents the range of products produced within the Japanese economy, including items such as:
  • raw materials like metals and chemicals
  • semi-finished goods
  • and finished products
  • different weights are assigned to each category within the index based on its contribution to the overall economy.
• it does not account for the quality improvements in goods and services over time, which might lead to overestimation of inflation
  • additionally, it reflects only the prices of domestically produced goods, leaving out the impact of imported goods

The PPI can be used as a guide to inflationary pressures in the economy:

• If producers are facing higher costs, they may pass these on to consumers, leading to higher consumer prices.

This article was written by Eamonn Sheridan at www.forexlive.com.