PPI data reaction from Barclays: PPI.....>

JAPAN DATA: PPI data reaction from Barclays: PPI was up for a 12th consecutive

month in December. Month on month, the index saw a fourth straight gain. "This

reflected positive m/m contributions from oil/coal products (0.08pp), chemicals

(0.04pp) and agriculture/forestry/fishery products (0.03pp), along with a

negative contribution from utilities (-0.01pp)."

- Barclays note that "upstream" price rises seen in PPI subcomponent "beverages

& foods and agricultural products for food" are likely to become evident

"downstream" in CPI with a lag. "we expect CPI-based food prices (excluding

perishables) to trend around 1.0% y/y in the months ahead, becoming a factor

driving inflation in 2018."

- "Terms of trade have deteriorated y/y for 12 consecutive months since import

prices began to rise y/y in January 2017. Oil prices remain in an uptrend, which

could continue to weigh on terms of trade. However, when viewed together with

the real effective exchange rate, the corporate earnings environment has not

necessarily deteriorated rapidly. Even so, oil prices and terms of trade may

warrant increasing attention"