TOKYO (AFX-ASIA) - The Bank of Japan said domestic WPI in April fell 0.7 pct year-on-year, the largest such drop in 18 months, due to falling microchip prices, as well as declines in the auto sector on company cost-cutting.
Prices fell 0.8 pct year-on-year in October 1999.
Wholesale prices of electric equipment, which includes microchips, fell 4.7 pct year-on-year in April, while transport equipment prices fell 2.0 pct, a bank official said. Electric equipment prices were down 0.4 pct month-on-month.
"This month, prices of microchips for mobile phone use, such as S-RAM and flash memory, started to decline amid slowing demand for cellphones in overseas markets," the official said.
"In addition, mobile phone prices are falling in Japan due to severe competition," he added.
The official said the prices of DRAM chips used in PCs, which have been falling recently, were flat in the month.
The second biggest contributor to the decline in overall WPI was transport equipment, down 0.3 pct month-on-month, due to falls in prices of auto parts amid cost-cutting by makers.
Meanwhile, the official said export prices on a contract-currency basis fell 0.9 pct month-on-month and dropped 4.4 pct year-on-year, with import prices down 0.7 pct and 1.4 pct, respectively.
Import and export prices in yen terms rose due to the fall in the value of the yen.