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Price Developments in Fiscal 1995 *1

(Overall Trends *2)

  • *1April 1995 - March 1996.
  • *2The full text is on the August 1996 issue of the Quarterly Bulletin.

August 1996
Bank of Japan
Research and Statistics Department

During fiscal 1995, wholesale prices and corporate service prices continued to fall, while consumer prices remained rather stable.1 During the first half of the fiscal year, the pace of decline in wholesale prices quickened somewhat, reflecting the rapid appreciation of the yen and the pause in Japan's economic recovery, and consumer prices (excluding fresh food) also recorded a lower level than the previous year. In the second half of fiscal 1995, weakening of prices gradually came to a halt as the yen's appreciation reversed and Japan's economic recovery progressed.

Domestic wholesale prices in the wholesale price indexes (annual average; hereinafter referred to as the WPI) declined for the fourth consecutive year in fiscal 1995, dropping 0.8 percent from the previous year.2 However, compared to the decline of 1.3 percent in fiscal 1994, this decline was moderate. The pace of decline in the latter half of fiscal 1995 slowed considerably compared to that in the first half, when calculated excluding electric power charges, which is a major factor influencing price trends. Export prices in yen terms marked the first rise in six years and rose by 0.5 percent in fiscal 1995 compared to a 2.7 percent decline in fiscal 1994. Import prices in yen terms edged down by 0.3 percent in fiscal 1995, marking a smaller change than the 1.5 percent decline of the previous fiscal year. This somewhat upward trend in export and import prices was largely owing to the reversal of the yen's appreciation since summer 1995, which reduced the annual average rate of the yen's appreciation, despite the slower increase in both export and import prices on a contract currency basis reflecting the slowdown in growth of the world economy (i.e., 2.5 percent and 2.4 percent for export prices, and 5.6 percent and 3.1 percent for import prices, in fiscal 1994 and 1995, respectively).

Corporate service prices (corporate service price index, the CSPI) fell for the third consecutive year: the CSPI fell by 1.0 percent from the previous year, as cost-reduction efforts by firms remained strong. This decline was smaller than that of fiscal 1994 (1.2 percent), owing to an increased demand for advertising and information services, reflecting a recovery in corporate earnings.

Consumer prices (consumer price index, the CPI) excluding fresh food, remained rather stable and registered a 0.0 percent change from the previous year, compared to a 0.6 percent increase in fiscal 1994. Contributing factors included the decline in the overall wholesale prices, the ongoing "price destruction," and the weaker growth in service prices owing to slack labor market conditions. Consumer prices declined from the previous year in the first half of fiscal 1995, but then rose in the second half owing in part to the bottoming out in prices of clothes. General consumer prices, including fresh food, declined by 0.1 percent from the previous year, a drop from the 0.4 percent rise in fiscal 1994, and recorded the first decline since the current statistical survey began in 1970.

  1. This article examines price developments in fiscal 1995, starting in April 1995 and ending in March 1996.
  2. Percentage changes in this article are changes in the annual average from the previous year, except as noted.