Producer Price Index MoM

The Producer Price Index MoM is the monthly change in the Producer Price Index (PPI), the domestic part of the Corporate Goods Price Index (CGPI). The Bank of Japan (BOJ) compiles it monthly from producer shipment prices for goods made and sold in Japan.

It covers 515 commodities and 4346 sample prices, with the 2020 average set to 100 as a reference level, not a threshold. Rebasing takes place every 5 years, the series began in January 1887, and it excludes consumer prices, services, exports and imports. Consumer prices sit in the Consumer Price Index (CPI), export and import prices in separate indexes.

Prices are collected by questionnaires sent at the start of the following month, with late prices entering later revisions. Preliminary figures appear at 8:50 a.m. JST on the 8th business day of the month following the reference month on the Bank of Japan website.

Each release shows export and import indexes in yen and contract currency with change, contribution and exchange-rate tables. Confidential commodities are merged with peers in the same class, with reference indexes also published. Revisions run over the next 3 months, with a September revision on the 9th business day back to January of the prior year. Unscheduled revisions occur when the impact on the all-commodities index is significant.

Moves come from 23 groups weighted by 2019 to 2020 shipment values, with the 6 largest below.

• Transportation equipment, weight 150.9 per 1000: motor vehicles and parts.
• Beverages and foods, weight 144.6 per 1000: processed foods, beverages and feeds.
• Chemicals and related products, weight 86.1 per 1000: petrochemicals, resins, medicaments and cosmetics.
• Electric power, gas and water, weight 58.4 per 1000: industrial electricity, gas and water.
• Petroleum and coal products, weight 52.8 per 1000: naphtha, fuel oils and coal coke.
• Iron and steel, weight 50.6 per 1000: hot-rolled steel, pipes and coated steel.

The April 2022 report, released May 16, 2022, shows the mechanism. The index stood at 113.5 on a 2015 base, up 1.2% on the month and 10.0% on the year. Petroleum and coal added 0.37 points, iron and steel 0.24 points and nonferrous metals 0.15 points. Electric power, gas and water added 0.08 points, while chemicals subtracted 0.08 points.

In the same release, the export index rose 1.6% and the import index 5.6% in contract currency and 10.8% in yen. Import prices ran far above domestic producer prices, and the headline is a weighted sum that can hide large falls.

1. Fix specs: Hold product content, buyer and deal terms steady so only pure price change counts.
2. Collect prices: Survey the reference-month price at the start of the following month by mail or online. Use repeated deals, average unit values, model prices or list prices.
3. Build commodity indexes: Divide each quote by its 2020 average, then weight, sum and divide by commodity weight. This fixed-weight Laspeyres method also sets higher orders to 100 in 2020.
4. Worked example (illustrative): Take commodity X with quote A (weight 3, price 1050 against 1000, ratio 1.050). Quote B has weight 1, price 510 against 500 and ratio 1.020, so the index on 4 is 104.3 and MoM on 103.0 is 1.2%.
5. Compute MoM: Divide the current index by the prior month index, subtract 1 and multiply by 100, with no seasonal adjustment.
6. Fill gaps: Impute missing prices with the prior month price, then replace them when actuals arrive in revisions.
7. Guard quality: Strip quality change with 9 set methods, and hold the index flat when quality cannot be measured.
8. Hold weights and convert currencies: Keep weights fixed on 2019 to 2020 values between rebasings, with a yearly chain version. December resets to 100, with contract currencies used directly and yen at monthly-average middle spot rates.