Core consumer prices in Japan decline
Source: Agencies |
November 26, 2011, Saturday
|
Print Edition
Print Edition
JAPAN'S core consumer prices fell for the first time in four months in October after a cigarette tax hike a year ago dropped out from calculations revealing persistent deflation due to chronically weak domestic demand.
In fact, November data for the Tokyo area showed deeper declines that exceeded analysts' forecasts and backed the view that the Bank of Japan will maintain ultra-easy monetary policy for the foreseeable future.
A narrower measure of prices that excludes both food and energy fell from a year ago in a sign that the world's third-largest economy continued to struggle with lackluster job market, weak consumer demand and excess capacity.
Core consumer prices fell 0.1 percent as forecast in a sign of weak aggregate demand as a strong yen and spillover from Europe's sovereign debt crisis dampen export demand.
Bank of Japan Governor Masaaki Shirakawa yesterday expressed alarm that the eurozone crisis may bring more pain for the economy. "Europe's sovereign problems have affected Japan through the yen's strength and stock price falls. As emerging economies that have close trading relations with Europe slow down, Japan's exports to those economies may decline."
Japan's economy rebounded from a recession triggered by the March 11 earthquake and tsunami and grew 1.5 percent in the third quarter. But it is expected to slow sharply this quarter as the initial spurt driven by companies restoring supply chains and production facilities tails off.
With an expected boost from a US$155 billion reconstruction budget passed this week still some months away, authorities may feel pressure to help the economy again with yen-selling intervention and monetary policy easing.
In fact, November data for the Tokyo area showed deeper declines that exceeded analysts' forecasts and backed the view that the Bank of Japan will maintain ultra-easy monetary policy for the foreseeable future.
A narrower measure of prices that excludes both food and energy fell from a year ago in a sign that the world's third-largest economy continued to struggle with lackluster job market, weak consumer demand and excess capacity.
Core consumer prices fell 0.1 percent as forecast in a sign of weak aggregate demand as a strong yen and spillover from Europe's sovereign debt crisis dampen export demand.
Bank of Japan Governor Masaaki Shirakawa yesterday expressed alarm that the eurozone crisis may bring more pain for the economy. "Europe's sovereign problems have affected Japan through the yen's strength and stock price falls. As emerging economies that have close trading relations with Europe slow down, Japan's exports to those economies may decline."
Japan's economy rebounded from a recession triggered by the March 11 earthquake and tsunami and grew 1.5 percent in the third quarter. But it is expected to slow sharply this quarter as the initial spurt driven by companies restoring supply chains and production facilities tails off.
With an expected boost from a US$155 billion reconstruction budget passed this week still some months away, authorities may feel pressure to help the economy again with yen-selling intervention and monetary policy easing.
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