April 26, 2005


Japanese economy stuck in deflation (David Pilling, April 26 2005, Financial Times)

Consumer prices fell for a seventh straight year in the 12 months to end-March 2005, confirming that the economy remains stuck in deflation in spite of three years of stop-start growth.

The decline in the core consumer price index, of 0.2 per cent, was far less severe than the 0.8 per cent of the previous two years.

But a sharp fall in the price of deregulated utilities, including electricity and fixed-line telephone charges, may have added fresh impetus to deflation. The CPI for Tokyo in April, which comes out a month ahead of nationwide statistics, fell by 0.5 per cent.

The Bank of Japan is on Thursday widely expected to put back its prediction of a return to inflation from this year to next when it publishes a six-monthly report on future trends in prices and economic activity. Last October, the BoJ forecast a return to mild inflation, of 0.1 per cent, in the year to end-March 2006.

Prices aren't going to head up as their population declines.

Posted by Orrin Judd at April 26, 2005 3:27 PM
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