Japan's wholesale prices fall in April but decline slowing

12:54, May 17, 2010      

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Japan's wholesale prices in April fell 0.2 percent from a year earlier, the Bank of Japan (BOJ) said in a preliminary report on Monday.

The central bank's Domestic Corporate Goods Price Index stood at 103.0 against the 2005 base of 100, the report said.

Despite the data showing a 16 consecutive year-on-year drop, the BOJ said the rate of decline continued to slow from March's reading of an unrevised drop of 1.3 percent and 1.6 percent in February.

Additionally, April's drop was marginally less than the consensus 0.3 percent fall predicted by analysts.

Prices of nonferrous metals and coal helped lift the overall Domestic Corporate Goods Price Index in April by a provisional 0.4 percent from a month earlier, marking a fifth successive month-on- month rise, with petroleum and coal rising 5.1 percent, and nonferrous metals posting a positive reading of 4.8 percent, according to Japan's central bank.

A BOJ official said that CGPI continued to rise steadily as the global economy recovers and emerging economies continue to develop.

Prices paid for general machinery, however, slipped 0.3 percent in April from a month earlier and pulp and paper prices fell 0.2 percent. Prices for chemical products fell 1.0 percent in April from a month earlier, the BOJ said.

General machinery was down from a month earlier by 0.3 percent, electrical machinery fell 0.5 percent and prices fro electrical components shed 0.2 percent the BOJ said.

As companies face rising costs for products it adversely affects profit margins and previous declines in corporate prices have been a direct result of the rising costs of imported raw materials and a moderate decline in general demand, analysts said.

"Producer prices will probably turn positive within a few months, but companies will continue to have difficulty passing on costs," said one Tokyo-base economist at Dai-Ichi Life Research Institute.

"Their profit margins are being squeezed."



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