Japan's wholesale prices drop 1.5% in Feb

12:51, March 10, 2010      

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Japan's wholesale prices in February fell 1.5 percent from a year earlier, the Bank of Japan ( BOJ) said in a preliminary report on Wednesday.

Wholesale prices, gauged by the central bank`s corporate goods price index, which slipped 2.1 percent in January, stood at 102.5 against the 2005 base of 100.

Contributing to the corporate goods price index's fall were some resource-related commodities including iron and steel which plummeted 15.9 percent from the same time a year earlier, standing at a preliminary 110.9 points against the 2005 base average of 100, the BOJ said.

Electrical machinery and equipment also marked a notable on year price decline, retreating 4.6 percent to stand at a preliminary 92.2 in February and prices for information and communications equipment fell 7.6 percent on year to stand at 70.4.

The BOJ reported that prices for electronic components and devices in February had slipped 5.8 percent from a year earlier to stand at a preliminary 80.7 points.

As compared to January's figures, however, prices rose a preliminary 0.1 percent in February, the BOJ said. The month-on- month figures matched market expectations.

Bucking February's downward on-year trend and buoying the index however, Japan's central bank reported that prices for petroleum and coal products surged a preliminary 26.9 percent from a year earlier to 115.6 points and added 0.6 percent from a month earlier.

Prices paid for nonferrous metals further boosted February's index rising a preliminary 20.6 percent from a year earlier to 122. 2 points in February against the 2005 base average of 100, according to the BOJ.

Economists note that producer prices have fallen at the slowest pace since January 2009 and as the cost of commodities increases, companies, battling deflation, are under pressure to stay in the black by passing on the costs to clients

"The economy's recovery only started last year and it will take time for the improvement to spread" and increase companies' pricing power, said Azusa Kato, an economist at BNP Paribas in Tokyo.

"Though we're seeing instances of cost pass-through in some industries, terms of trade are worsening and hurting corporate profits overall."

The central bank said in its February economic report that producer prices "are likely to rise somewhat or remain unchanged for the time being," adding that consumer prices, which have declined for 11 months, will keep falling.

Source:Xinhua
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