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Japan’s producer prices up 3.7% in April

May 15, 2008
By Ken Worsley


On Wednesday, the Bank of Japan announced that producer prices had risen 3.7% in April, following the 3.9% gain that was seen in March. April was the 50th straight month in a row that wholesale prices have increased, demonstrating the effect of strong commodity prices in the international market.

On the domestic index, higher iron and steel prices contributed most to the gain, while metal products (including cold rolled steel) contributed most to the gain in export prices. Import prices were driven up mainly by petroleum, coal and natural gas prices, with food, feed and metals contributing at lower rates.

What response might the Bank of Japan have to all of this? Most commentators currently seem of the mind that the BOJ is growing more cautious about possible raising rates. The Nikkei even went as far as to call the BOJ’s short-term stance “dovish” in an article that attempted to plot BOJ policy board member opinions on an X/Y graph (Bearish/Bullish is on the X axis while Positive/Negative sits on the Y).

With the GDP deflator and labor cost per unit still in negative territory, rising costs become more of a worry as firms will be forced to decide whether to raise prices or allow profit to be eroded. Consumer spending will have to hold up - in the face of stagnant wages and possibly increased prices - or exports will have to grow considerably, which seems highly unlikely in the near term. Or, as BOJ Governor Shirakawa announced a couple of weeks ago, “It’s possible [global commodity prices] may reach the ceiling relatively soon.”

It’s hard to tell if he was expressing hope or making a prediction…

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Comments

5 Responses to “Japan’s producer prices up 3.7% in April”

  1. Gray on May 16th, 2008 12:32 pm

    Surely OPEC has offered to incease production if the US pulls out of Iraq.

  2. Ken Worsley on May 16th, 2008 6:17 pm

    But you’re probably not supposed to say that out loud.

  3. Gray on May 18th, 2008 11:39 pm

    Bush didn’t get far on that, did he?

  4. cmyk on May 21st, 2008 9:06 pm

    Bush has no chance whatsoever against the Saudis. Is there really a lack of supply? Nope. There is plenty of oil, supply is still meeting demand just fine, it’s just that speculators keep driving the price up. Going to a spot only market would help balance the price.

    Turning the taps up makes no sense for OPEC. Pulling their money out of US equities might. Bush can ask for whatever he wants, but the reply is always going to be that is the US president plays hardball, Saudis pull cash out. They own what, 7% of the US economy?

    And so Bush was left with nothing but his pathetic speech against rights in the Arab world.

    Too bad he no longer wields any real power. Too bad for Americans, that is.

  5. Ken Worsley on May 22nd, 2008 12:59 am

    Gray,

    Bush didn’t get anywhere and that’s no surprise.

    cmyk,

    Getting rid of the futures market? Are you serious? There’s just no way that could happen, and I see no reason it should. Where would it stop? Spot only for coffee? Wheat? Hog bellies?

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