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CHAPTER 20 PRICES
This chapter covers prices of goods, services and land.
The section of price indices contains domestic corporate prices, export and import prices, agricultural prices, consumer prices, etc. Data are mainly derived from statistics posted on the website by the Bank of Japan, "Statistics of Agricultural Prices" by the Ministry of Agriculture, Forestry and Fisheries, "Annual Report on the Consumer Price Index" by the Statistics Bureau, Ministry of Internal Affairs and Communications, and "Urban Land Price Index and National Wooden House Market Value Index" by the Japan Real Estate Institute.
The section of prices contains retail prices and land prices. Sources of data for prices are "Annual Report on the Retail Price Survey" by the Statistics Bureau, Ministry of Internal Affairs and Communications; and for land prices, "Land Price Survey by Prefectures" by the Ministry of Land, Infrastructure, Transport and Tourism.
Corporate Goods Price Index
The Corporate Goods Price Index, which is compiled monthly by the Bank of Japan, is aimed to grasp demand and supply conditions of commodities and to provide materials for judging business conditions and for formulating monetary policy, by collecting trading prices of commodities traded among enterprises.
The Corporate Goods Price Index succeeded the Wholesale Price Index. When the base year was shifted to 2000, the name of the index was changed to the present one. The year for the base and weights of the present series is 2010.
The Corporate Goods Price Index consists of basic grouping indices and reference indices. The basic grouping indices consist of three indices: Producer Price Index, Export Price Index and Import Price Index. These indices are calculated, firstly, by transforming price of individual goods into indices, and secondly, by consolidating them into a single index by the "Laspeyres method with a fixed base", which means to add up the indices using corresponding weights at the base year. The reference indices, such as indices by trading stage or by use, are calculated for analytical needs and users? convenience by rearranging and adjusting the basic grouping indices.
Producer Price Index
The index reflects prices of corporate goods that are produced domestically for domestic consumption at the shipping stage from producers. The weights are calculated by subtracting the amount of exports in 2010, which is obtained from the "Trade Statistics of Japan" by the Ministry of Finance, from the amount of producer's shipment in 2010, which is obtained from the "Census of Manufacture (Report by Commodity)" by the Ministry of Economy, Trade and Industry. For weights of some commodities for which the standard method is not applicable, other statistics or materials are used. Number of commodities used for the index is 822, and the prices include consumption tax.
Export Price Index, Import Price Index
The Export Price Index is based, as a principle, on the FOB (free on board) prices, that is the prices of export goods at the time of shipping from Japan, and the Import Price Index is based, as a principle, on the CIF (cost, insurance and freight) prices. The indices are computed both on the yen basis and the contract currency basis. The weights are derived from the export and import data obtained from "Trade Statistics of Japan" for 2010. Numbers of commodities used for the indices are 210 for export and 254 for import.
Index by Stage of Demand and Use
The Index by Stage of Demand and Use is computed by recombining the basic grouping indices, focusing at various stages of demand or uses of goods. It is used for analysing price fluctuations from various aspects such as the analysis of ripple effects of price changes. The index is computed on the consumption tax free basis.
Service Producer Price Index
This index measures the change in prices of services traded among companies. This index is used to grasp the conditions of supply and demand of services by summarising the prices of services traded among companies, and to provide basic information for analysing business trend and for the decision of monetary policy. The index is compiled monthly by the Bank of Japan based on the Laspeyres-type formula with fixed weights and including consumption tax.
The index was first released in 1991, and the base year for the present index is 2010, and the number of service items to be priced is 147.
Input-Output Price Index of the Manufacturing Industry by Sector
The index, which focus on the production activity of manufacturing industry, is composed of input index and output index. The input index indicates the price movement of raw materials, fuels and energy, and services consumed in current productive activity, while the output index indicates the price movement of manufactured goods. They are computed by the Bank of Japan every month, using the Laspeyres-type formula with fixed weight.
The indices were originated in 1963 as supplementary indices to the Wholesale Price Index, and renamed to the present one on the occasion of 1975 revision of the base. The base year for the present indices is 2005, and the price data are taken from those of the Corporate Goods Price Index and the Service Producer Price Index. Number of commodities is 1,263 for the Input Price Index and 1,259 for the Output Price Index. Both indices are based on the consumption tax free basis.
Index Numbers of Commodity Prices in Agriculture
Index Numbers of Commodity Prices in Agriculture is compiled every month by the Ministry of Agriculture, Forestry and Fisheries in order to measure the price movement in agricultural inputs and outputs, using the Laspeyres-type formula. The base year of the current index is 2010. The weights are computed from average gross agricultural receipts and agricultural expenditures per agricultural entity derived from the 2010 Survey on Farm Management and Economy (see "8 Agriculture, Forestry and Fisheries"). Number of items is 120 for agricultural products, 141 for materials for agricultural production. The price of agricultural products to be used is the sales price after deducting cost and is the ordinary price of retail shop selling agricultural production material.
Consumer Price Index
The index has been compiled monthly since August 1946 by the Statistics Bureau, Ministry of Internal Affairs and Communications for the purpose of measuring changes of various goods and services purchased by households all over Japan, thereby analysing the movement of prices in time series.
The year for the base and weights of current index is 2010, and the index is compiled, based on retail prices obtained from the Retail Price Survey (described later), using the Laspeyres-type formula. The weights are calculated on the basis of average monthly living expenditures per household by commodity of two-or-more-person households in 2010 obtained from the Family Income and Expenditure Survey (see "22 Family Income and Expenditure"). Index items to be priced are 588 items which are selected according to the relative importance in total living expenditures, representativeness in price movement, and availability in price survey. Prices of index items are furnished by the Retail Price Survey.
As for the general index, which is the most basic index, the index including "imputed rent," which was introduced at the time of 1970 revision and had been treated as a reference series, has been treated as the main series since 1985 revision of the base.
Retail Price Survey (Fundamental Statistical Survey)
The survey collects retail prices, charges and rents of commodities and services which constitute items essential to consumers' daily life. It consists of two parts, namely, ?Trend Survey? for clarifying monthly trends of prices, and ?Structural Survey? for clarifying price structures by region and store type.
The former has been conducted every month since June 1950 by the Statistics Bureau, Ministry of Internal Affairs and Communications to obtain data for the Consumer Price Index and other basic materials concerning prices. It is conducted at about 27,000 retail stores and establishments in selected 167 municipalities (cities, towns and villages). Prices surveyed are normal retail prices or normal service charges sold to consumers, and exclude, as a rule, bargain prices for a short period and temporary extraordinary prices such as those of clearance sale. As of January 2013, the number of survey items is 510, and the number of specifications (subdivision of items) is 710.
Regarding price structures, they had been grasped by the National Survey of Prices conducted once every five years. Because it became difficult to appropriately know the changes in price structures through a 5-year cycle survey, however, an annual survey to obtain structural price data was introduced forming a part of Retail Price Survey as "Structural Survey". This annual survey has been conducted since January 2013. With the introduction of "Structural Survey", the National Survey of Prices was terminated after the last survey in 2007.
Regional Difference Index of Consumer Prices
The index has been compiled annually since 1947 by the Statistics Bureau, Ministry of Internal Affairs and Communications with the aim of measuring regional differences in the level of consumer prices.
The indices of ?Total? and ?Ten major groups? of items are prepared for 10 geographical divisions of Japan and for prefectures using the average prices of Japan as the base. Also compiled are the regional difference indices for 51 cities consisting of the prefectural capitals and the major cities designated under the Local Autonomy Act. They are provided as one of the results of ?Structural Survey? of the Retail Price Survey, using reviewed calculation methods. The indices are calculated by a formula similar to Fisher?s one (quasi-Fisher formula), and the monthly results of the Family Income and Expenditure Survey for the most recent five year period are used as weights.
Urban Land Price Index
The Urban Land Price Index is an index to show the movement of prices of urban land, and was initiated by the former Nippon Kangyo Bank in September 1936, and from March 1959, the index is compiled by the Japan Real Estate Institute as of the end of March and September every year.
The base of the present index is March 2000, and the index of the present term is calculated by multiplying the index of the previous term and the average change of prices over the previous term by use.
Land prices used in the index calculation are surveyed in 223 major cities, and the points of pricing are to be standard and representative, and selected according to use of the land (commercial, residential and industrial) and according to grade of the land (high, medium and low).
Land Price Survey by Prefectures
This survey is conducted to provide the standard for price screening in the regulation of transaction of land, and for assessment of purchase price, thereby forming proper land prices. Based on the Implementation Decree of the National Land Use Planning Act, the survey is conducted every year under the jurisdiction of prefectural governors and the report of the survey is released by the Ministry of Land, Infrastructure, Transport and Tourism. The 2014 survey covered 21,231 lots for residential area and 509 lots for forest area. Prices sought are those judged appropriate by the prefectural governors based on the prices evaluated by real estate appraisers.
