Business / Economy

Wholesale prices logged 3.4% drop in 2016

Kyodo

Wholesale prices in 2016 fell 3.4 percent to log their second consecutive annual decline as the yen advanced and crude oil prices sank on the back of slowdowns in China and other emerging economies, the Bank of Japan said Monday.

The data cast a pall over the outlook for the central bank’s 2 percent inflation target. The BOJ has pushed back the target five times, most recently to around fiscal 2018, despite aggressive monetary easing and a negative interest rate policy.

The corporate goods price index stood at 99.2 against the 2010 base of 100, the BOJ said in a preliminary report.

Oil and coal prices plunged 16.2 percent compared with the previous year, while electricity, gas and water eased by 12.5 percent. Prices for nonferrous metals sank 12.3 percent while chemical products slipped 6.9 percent.

Among gainers, agricultural and marine produce rose 2.1 percent and business-oriented machinery edged up 1.1 percent.

Crude oil showed signs of recovering in line with the yen’s fall toward the end of the year, but a BOJ official said the central bank will continue to monitor the situation amid uncertainties about the economic policies of U.S. President-elect Donald Trump.

Export prices slumped 9.9 percent from a year earlier while import prices tumbled 17.5 percent, both in yen terms.

In December alone, the index fell 1.2 percent from a year earlier to 99.7, marking the 21st consecutive monthly fall. But the margin of decline turned out to be the lowest in the past 21 months, thanks to a rally in crude oil prices sparked by OPEC’s agreed production cuts.

Prices of chemical products fell 4.7 percent and those of electricity, gas and water plunged 10.0 percent during the month. Oil and coal meanwhile rose 3.7 percent for the month.

On a month-on-month basis, the price index rose 0.6 percent from November.

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