Japan Remains Stuck In Deflation in August


Nationwide core consumer prices in Japan declined 1.0 percent on year in August, the Ministry of Internal Affairs and Communications said on Friday, marking the 18th straight month of deflation.

Overall nationwide inflation was unchanged at -0.9 percent on year, again in line with forecasts, but up 0.3 percent on month.

Among the key components, prices for education plunged 13.0 percent on year thanks to a decline in tuition costs. This was followed by furniture (-4.4 percent), recreation (-1.5 percent), clothing (-0.8 percent) and food (-0.7 percent). Fuel prices rose an annual 2.8 percent.

Overall inflation for Tokyo - considered a leading indicator for the nationwide trend, showed a 0.6 percent decline on year in September. Analysts had been expecting a 0.9 percent decline following the 1.0 percent contraction in August. It was up 0.3 percent on month.

Core inflation in Tokyo came in at -1.0 percent, matching forecasts after shedding 1.1 percent in August.

Among the key components, prices for education shed 6.6 percent on year, followed by furniture (-4.1 percent), recreation (-1.3 percent), housing (-1.0 percent) and communications (-0.5 percent. Fuel prices were up 4.2 percent on year.

The persisting deflation figures to be a main topic of conversation once again in next week's Bank of Japan monetary policy board meeting. Interest rates are already at a record low 0.10 percent, and now the bank is said to be pondering other measures, up to and possible including quantitative easing.


TradingEconomics.com, RTTNews
10/2/2010 2:14:32 PM