Worries that deflation will affect Japan’s economic recovery were strengthened after official data revealed that consumer prices in the country fell by near-record levels in October. For the month, consumers prices (excluding fresh food) dropped by 2.2% on the year, following a 2.3% fall in September. Consumer prices excluding energy and food fell 1.1% during the month.

This was the eight straight month that prices have fallen, and could prompt the Bank of Japan to take measures to boost prices. Prices could also be affected by the yen’s moving to a 14-year high against the US, which will push import costs lower and could force domestic companies to cut prices to remain competitive. Inevitably, prices are also being affected as retailers are pushing for even greater promotions in order to get consumers to spend again.

The Bank of Japan insisted that while price declines will continue into 2011, they will slow down considerably. It expects core prices to fall 0.4% in the year starting 1 April, 2011.

NamNews - Friday 27th November 2009

 

See column on the right for related news items
or search our NamNews Archive containing over 9 years of industry news (Subscriber-only)