MNI DATA IMPACT: Japan May CGPI -2.7% Y/Y; Lowest Oct 2016

     TOKYO (MNI) - Japan's corporate goods price index posted a third straight

year-on-year decline in May, with the index falling to the lowest level since

October 2016, data released by the Bank of Japan Wednesday showed.

     May's 2.7% y/y fall accelerated from a 2.4% decline in April and -0.4% in

March and matched the 2.7% decline in Oct 2016.

     The drop was mainly caused by weaker prices for petroleum and coal products

(down 36.7% y/y in May vs. -30.1% in April).

     A BOJ official said that Japan's CGPI continued to be weighed down by the

spread of the coronavirus.

     "Demand for steel remained weak in the wake of sluggish demand for

automobiles around the globe," the official said.

     However, he noted that demand for nonferrous metals has stopped falling, as

demand recovered in China.

     "Crude oil prices rebounded. If such move continued, CGPI may hit bottom as

CGPI is strongly influenced by crude oil price moves," the official added.

     On the month, CGPI fell 0.4% in May for a fourth straight drop following a

1.6% decline in April.

     Japan's CGPI isn't directly linked to the government's consumer price

index, but the latest data indicated the outlook for CPI remains weak.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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