Japan's CGPI may have contracted as the sales-tax effect faded

Japan will release the April domestic corporate price index (CGPI) on 15 May. It is expected to have contracted 2.1% y/y as the impact of the sales-tax hike in April 2014 faded. 

The CGPI (excluding the sales-tax hike) has been contracting y/y since last November on lower global oil prices. The import price index of oil products in Japanese yen (JPY) terms has declined sharply in recent months. 

Although oil prices have picked up slightly, it will take time for this to feed through to the economy if the trend continues. 

At its 30 April Monetary Policy Committee (MPC) meeting, the Bank of Japan (BoJ) pushed back its deadline for meeting the 2% inflation target, owing to the slowdown in inflation.