Dow Jones News -- Record Falls In Japan Corp Goods Prices Continue .................................................
AUGUST 11, 2009, 10:45 P.M. ET
UPDATE: Record Falls In Japan Corp Goods Prices Continue
(Adds details, comments from a BOJ official.)
By Megumi Fujikawa
DOW JONES NEWSWIRES
TOKYO (Dow Jones)--Japan's corporate goods price index fell at its fastest pace on record for the second straight month in July, adding to concerns that deflation in the world's second largest economy is accelerating.
The Bank of Japan's CGPI data, which tracks prices of domestically produced and used goods traded among companies, plunged 8.5% in July from a year earlier, breaking the record 6.7% drop set in the previous month.
Prices of 412, or 48.2%, of the 855 items included in the CGPI fell on year in July, a BOJ official said. That was an increase from June, when the prices of 380, or 44.4%, of the components dropped.
Wednesday's results will likely heighten fears of persistent price falls in Japan, as overall economic activity has yet to show signs of a full-fledged recovery.
Still, BOJ Gov. Masaaki Shirakawa said at a regular press conference on Tuesday that the BOJ doesn't expect Japan to fall into a deflationary spiral now, though "it may take time for falls in prices to end."
The steep on-year decline in July was mostly a reaction to a surge in oil prices last summer. Petroleum and coal product costs dropped 43.1% on year, after falling 41.7% in June.
"Prices of raw materials and commodities exert upward pressure (on the domestic CGPI) as the global economy improves. But final demand remains sluggish in the country, even if the economy is on a recovery trend, putting downward pressure on prices," the official said. "These two factors will likely spur a tug of war down the road."
On a monthly basis, the domestic CGPI rose 0.4% in July, due partly to a revision in electricity prices.
Prices of electric power, gas and water increased 2.3% on month, following a 3.1% drop in June.
-By Megumi Fujikawa, Dow Jones Newswires; 813-6895-7559; megumi.fujikawa@dowjones.com
Copyright ©2009 Dow Jones & Company, Inc. All Rights Reserved. |
