WHAT IS Domestic Corporate Goods Price Index Japan

Domestic Corporate Goods Price Index Japan is a Japanese index. The Domestic Corporate Goods Price Index Japan measures the prices of firm-created goods created at the producer and wholesaler level in Japan. The Domestic Corporate Goods Price Index tracks changes in supply side prices within the Japanese economy. Changes in the CGPI often precede changes in the overall Consumer Price Index, as input values determine the overall retail values of the consumer goods. Thus, a large increase in the domestic CGPI will lead to a large increase in the overall consumer price index

BREAKING DOWN Domestic Corporate Goods Price Index Japan

Domestic Corporate Goods Price Index Japan is published on the eighth business day of each month and typically a large effect on the equities, commodities and forex markets occurs following its release. The headline figures are the percentage change in the overall domestic CGPI month over month, while the report itself publishes separate indices for each commodity category.

The Responsibility and Influence of The Bank of Japan

The Bank of Japan releases the CGPI. Established in 1882, the Bank of Japan serves the world's second-largest economy. The bank of Japan is the central bank of Japan bank and is headquartered in the business district of Nihonbashi in Tokyo. Along with the CGPI, The bank has numerous economic responsibilities and including the issuing and handling treasury securities, implementing monetary policy, maintaining the stability of the Japanese financial system, and providing settling and clearing services.

The bank also issues the Japanese yen. The yen first appeared in 1872 when it replaced the feudal era mon currency. The yen  lost most of its value by the end of World War II and was pegged to the U.S. dollar in 1949. When the U.S. went off the gold standard in 1971, the yen was devalued again and has been a floating currency since 1973, rising and falling against the dollar with the international exchange rates. The yen is the third most traded currency on the forex market after the US dollar and the euro.

Despite the struggles of the Japanese economy in the 21st century, many still consider the yen a safe haven currency. Meaning in times of investor stress or market turmoil, the Japanese yen appreciates, seen most recently during the Great Recession. The converse is also true, the yen tends to weaken when the global economy is strong and stock markets are moving higher. In the post-Recession years, this was evident where the yen slowly lost its value against the U.S. dollar as the global economy recovered. The weakening was exasperated when in 2013, the Bank of Japan embarked on large-scale quantitative easing.