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Services PPI Slightly Below Forecasts But Still Elevated By Historical Standards

JAPAN DATA
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Japan's PPI for services printed slightly below forecasts for July. We came in at 2.8%y/y versus 2.9% projected by the consensus. The June rise was revised up to a 3.1% gain (originally reported as a 3.0% rise).

  • Despite the loss of y/y momentum the m/m rise still accelerated to 0.3% from 0.1% in June. Given the y/y trajectory from last year though, base effects may still see y/y services PPI momentum wane as we progress through H2 of this year.
  • The chart below plots the services PPI y/y versus national headline CPI in y/y terms. PPI services inflation remains elevated by historical standards, although the correlation with headline CPI is not as strong as it has been in the past.
  • Note on Friday this week we get the August Tokyo CPI print.

Fig 1: Japan PPI Services & National CPI Y/Y

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Japan's PPI for services printed slightly below forecasts for July. We came in at 2.8%y/y versus 2.9% projected by the consensus. The June rise was revised up to a 3.1% gain (originally reported as a 3.0% rise).

  • Despite the loss of y/y momentum the m/m rise still accelerated to 0.3% from 0.1% in June. Given the y/y trajectory from last year though, base effects may still see y/y services PPI momentum wane as we progress through H2 of this year.
  • The chart below plots the services PPI y/y versus national headline CPI in y/y terms. PPI services inflation remains elevated by historical standards, although the correlation with headline CPI is not as strong as it has been in the past.
  • Note on Friday this week we get the August Tokyo CPI print.

Fig 1: Japan PPI Services & National CPI Y/Y

Keep reading...Show less