Rebasing the Corporate Goods Price Index to the Base Year 2020

The Bank of Japan plans to begin monthly releases of the Corporate Goods Price Index (CGPI) with the base year updated from the current 2015 to 2020, starting on June 10, when a preliminary index for May 2022 is to be published. The rebasing of the CGPI focused on four themes -- (1) responding to changes in the economic and industrial structures; (2) increasing the efficiency and sophistication of price index compilation; (3) reorganizing aggregate price indexes including introducing the FD-ID price indexes; and (4) examining the impact of COVID-19 -- and reflected the results in the 2020 base index. Consequently, the 2020 base index has maintained high standards, as the 2015 base index did. For example, the number of newly added commodities in the new index is 909 and the number of sample prices is 6,888, while the coverage of the commodities adopted in the Producer Price Index (PPI) is 81.3 percent. As a result of the rebasing, it will become possible to identify the following price developments of newly added commodities: (1) domestic producer prices and export prices of "Sensor devices," for which demand is growing against the backdrop of electrification of automobiles and increasing use of electronic components in vehicles; (2) export prices of "Catalyst," for which demand is increasing in emerging countries due to growing consciousness about environmental problems; and (3) import prices of "Medical and sanitary rubber products (rubber gloves)," for which the market has rapidly expanded amid the COVID-19 crisis. Moreover, because of periodic publication of the FD-ID price indexes, which are new indexes classified by stage of demand, it will become possible to measure inflationary pressures in the entire Japanese economy, including price trends of both goods and services, and also to track the process of price changes being transmitted from upstream to downstream in the production flow on a stage-by-stage basis. Both the index level and year-on-year change for all commodities in the 2020 base PPI showed generally similar movements with the 2015 base index. If examined more closely, the rate of year-on-year change in the new index for all commodities was slightly lower than the rate of change in the old index, with the negative difference coming to 0.3 percentage points on average between January 2021 and March 2022. This reflects the effects of the reduction of the weights in the new index of commodity groups whose prices have risen since 2021 in line with increases in international commodity prices, including "Petroleum and coal products," and "Chemicals and related products." During the process of the rebasing, the Bank received cooperation for its surveys from many companies and valuable opinions from many experts and other knowledgeable people. The Bank will continue to engage in close exchange of opinions with companies and users and constantly consider ways of improving price statistics.