"Japanese data on manufacturing conditions and household spending are likely to show further signs of improvement, but it's likely to be too early to expect CPI data to show fading deflationary pressures"
-Shane Oliver, Chief Economist at AMP Capital
Japan's corporate service price index unexpectedly declined last month, according to official data Tuesday. In a report, the BOJ said that CSPI, which tracks changes in supply side within the nation's economy, decreased to a seasonally adjusted annual rate of –0.4% in April compared to –0.2% a month earlier. That missed economists forecasts for a 0.2% drop, unchanged from the previous month. On a monthly basis, corporate service prices fell 0.3% following a 0.7% rise in March. As to individual components, prices increased for transportation and advertising, whereas they declined for real estate and were flat for other services. Changes in CGPI often precede changes in CPI.
The BOJ unveiled a massive stimulus last month, pledging to inject $1.4 trillion in less than two years, to bolster the nation's economy mired in deflation for more than a decade. The central bank was determined to achieve a 2% inflation target within two years; however, it revised the deadline to hit the inflation goal in the second half of a three-year period.
A set of important economic data on CPI, household spending and industrial output is due for release this week, which might also indicate whether the BOJ's stimulus to kick start the economy is working.
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