Tuesday, November 29, 2022

Japan’s consumer prices continue to slide on deflationary pressure from COVID-19 By Reuters


© Reuters. A woman looks at items outside an outlet store at a shopping district in Tokyo

By Leika Kihara

TOKYO (Reuters) – Japan’s core consumer prices slipped for the second consecutive month in September, a sign that a coronavirus-induced demand downturn is piling deflationary pressure on the world’s third-largest economy already blighted by recession.

The data is likely to heighten expectations the Bank of Japan (BOJ) will maintain its massive stimulus programme to cushion the economic blow from the pandemic, analysts said.

But analysts mainly blamed the drop on a government campaign aimed at promoting domestic travel, underscoring the tricky task of supporting the economy without pushing inflation further away from the central bank’s 2% target.

“The declines in August and September were caused largely by the government’s travel discount campaign,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“Weak service-sector demand could exert further downward pressure on prices at least until the coronavirus is contained.”

The nationwide core consumer price index (CPI), which excludes volatile fresh food but includes energy, fell 0.3% in September from a year earlier, government data showed on Friday. That compared with a median market forecast for a 0.4% decline.

When stripping away the effect of the government’s travel discount campaign, core consumer prices were flat in September from a year earlier, the data showed.

The data will be among factors the BOJ will scrutinise at next week’s rate review. People familiar with BOJ thinking have told Reuters the bank is likely to slash its economic and price forecasts for the current fiscal year.

Japan’s economy suffered its biggest postwar slump in the second quarter of the year, and analysts expect any rebound to be modest due to soft consumption and capital spending.

While demand for durable goods is picking up, social distancing policies and fears over a resurgence in infections continue to weigh on service consumption.

As part of efforts to rescue Japan’s ailing tourism sector, the government in July started a campaign offering discounts for domestic travel that is set to last until January next year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link


Please enter your comment!
Please enter your name here



Related Stories