Japan Inflation


Japan: Deflation continues

October 28, 2010

Consumer prices rose 0.3% month-on-month in September, following on a price change of the same magnitude in August. The reading was mostly fueled by higher prices for fresh food (+5.6% mom) as well as clothing and footwear (+5.9% mom). Despite the monthly price hike, on an annual basis consumer prices declined 0.6% (August: -0.9% year-on-year). Moreover, the closely watched core consumer price index ? which excludes fresh food, alcoholic beverages, and energy ? declined 1.5% over the same month last year, unchanged from August. The reading represented the 19th consecutive month of declining core consumer prices. The Central Bank expects core consumer prices to decline an average 0.4% this fiscal year, which ends in March 2011. For the fiscal year 2011, monetary authorities see the country barely exiting deflation with a core inflation rate of 0.1% before reaching 0.6% in the fiscal year 2012, which is nearly half the 1.0% considered as price stability by the Bank of Japan.


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