Japan Deflation Persists as Consumer Prices Fall 1.2%

Japan’s consumer prices fell for a 12th month in February, adding pressure on the central bank to eradicate deflation that is hampering the economic recovery.
TradingEconomics.com, Bloomberg 3/26/2010 11:01:55 AM

Prices excluding fresh food slid 1.2 percent from a year earlier, after dropping a 1.3 percent in each of the preceding two months, the statistics bureau said.

Finance Minister Naoto Kan said the report shows more efforts are needed to overcome deflation even as price declines ease. The Bank of Japan last week doubled a credit program for commercial lenders to 20 trillion yen ($220 billion), a move Governor Masaaki Shirakawa said is aimed at lowering borrowing costs further to spur growth and prices.

Deflation at least stopped spreading. The number of items in the consumer price index that became cheaper in February declined for the first time in 16 months, today’s report showed. Of the 524 goods in the index, prices of 335 fell, compared with 342 in January.

Core price decreases have moderated since peaking at 2.4 percent last August, largely because of costlier crude oil.

Japan Deflation Persists as Consumer Prices Fall 1.2%