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• This morning, Japan announced better-than-expected Producer Price Index numbers for May.
• It is thought that the figures, which showed a 0.3% and 0.4% rise, will boost the JPY.
• The USD/JPY has been on a four day winning streak, with the JPY weakening against the dollar steadily.

It’s been a difficult past month for the Japanese Yen, which has seen almost continuous weakening against the US dollar following the latter’s victorious bumper crop of Nonfarm Payrolls recently.

As of this morning (Wednesday 12th), the USD/JPY has risen for four days in a row, nearing the $157.25 price point at the time of this article going to press.

Today, so far, the USD/JPY has continued to strengthen during the Asian trading session, in anticipation of United States inflation data figures, as well as the Federal Open Market Committee (FOMC) decision on US interest rates, both coming out later today.
 

PPI figures today

However, the Yen may receive a boost from the country’s better-than-expected PPI figures, released this morning.

Earlier today, Japan announced that the Producer Price Index (PPI) readings for May 2024 were up 0.7% for the month, compared with April 2024.

The PPI year-over-year readings were just as high, coming in at a 2.4% increase compared with May 2023.

Both exceeded analysts’ expectations significantly. Broadly, it was anticipated that Japan’s MoM PPI reading would be around 0.4%, while YoY figures would sit around 2%.
 

What are PPI figures?

Japan’s Producer Price Index (PPI) is its index measuring the month-over-month and year-over-year change in the cost of goods and services sold by Japanese manufacturers and producers in the country’s wholesale market.

Essentially, if CPI is the cost of goods and services (therefore a measure of inflation) for consumers, PPI is the equivalent measurement for sellers, producers, manufacturers and businesses in general.
 

What’s the significance of PPI figures?

In essence, PPI measures the price it takes for a country’s manufacturers and other producers to make the goods that they (and others) will sell.

Therefore, PPI is a direct depiction of how expensive it is for many to do business in the nation – something that directly contributes to the overall economic health of that country.

Because of this (and the fact that costs tend to trickle down from wholesale producers to sellers and, lastly, to consumers) many market experts believe PPI to be more of a leading indicator of the progress of inflation than CPI is.

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