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JAPAN DATA: PPI Y/Y Back Above 3%, Should Support Headline CPI

JAPAN DATA
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Japan's October PPI was stronger than expected, up 0.2%m/m, versus a flat forecast. The prior month was also revised higher to a 0.3% gain (initially reported as flat). In y/y terms, we rose 3.4%, against a 2.9% forecast and 3.1% prior (initially reported as a 2.8% gain). 

  • The chart below plots the PPI y/y against headline CPI y/y for Japan. Whilst there is a clear levels difference between the two series, the directional correlation remains reasonable. Today's PPI result, all else equal, should be supportive of the CPI backdrop.
  • Looking at the detail, agriculture +26%y/y, non-ferrous metals +14.6%y/y, along with oil and coal +4.5% and textiles +4.6%y/y were the strongest contributors to the PPI y/y rise. Only three sub categories saw negative y/y prints. 

Fig 1: Japan PPI (White Line) & CPI Y/Y 

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Japan's October PPI was stronger than expected, up 0.2%m/m, versus a flat forecast. The prior month was also revised higher to a 0.3% gain (initially reported as flat). In y/y terms, we rose 3.4%, against a 2.9% forecast and 3.1% prior (initially reported as a 2.8% gain). 

  • The chart below plots the PPI y/y against headline CPI y/y for Japan. Whilst there is a clear levels difference between the two series, the directional correlation remains reasonable. Today's PPI result, all else equal, should be supportive of the CPI backdrop.
  • Looking at the detail, agriculture +26%y/y, non-ferrous metals +14.6%y/y, along with oil and coal +4.5% and textiles +4.6%y/y were the strongest contributors to the PPI y/y rise. Only three sub categories saw negative y/y prints. 

Fig 1: Japan PPI (White Line) & CPI Y/Y 

Keep reading...Show less