Japan’s consumer prices mired as deflation spectre looms By Reuters

Boston Feds' Rosengren: 'Main Street' loans to open beginning this



By Tetsushi Kajimoto

TOKYO (Reuters) – Japan’s core consumer prices were stubbornly unchanged in July, dashing hopes for a modest rise as the coronavirus pandemic hit household demand and revived fears of a national plunge back into deflation.

A slow economic recovery from last quarter’s record slump is expected to weigh on prices as consumer demand collapsed amid resurgent infections, which will in turn hit profits, jobs and business investment, analysts say.

The spectre of a return to deflation will keep the Bank of Japan (BOJ) under pressure to continue massive monetary stimulus and maintain ultra-low interest rates to support government fiscal spending aimed at battling the health crisis.

Japan’s core consumer price index, which includes oil products but excludes volatile fresh food prices, stood flat in July from a year earlier, data by the Ministry of Internal Affairs and Communications showed on Friday.

It fell short of a median market forecast for a 0.1% rise, following a flat reading in June.

Drops in gasoline prices reflecting weak global demand for offset gains in food and household durable goods such as electric rice-cookers and air-conditioners, the data showed.

“Taken together, core CPI is likely to stay largely flat towards next year,” said Yasunari Ueno, chief market economist at Mizuho Securities.

“Japan is in a deflationary situation. As we shift towards ‘new normal’ following the coronavirus, the BOJ’s 2% inflation target is increasingly losing reality.”

The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, rose 0.4% in the year to July, maintaining the pace seen in the last two months.

The BOJ projects consumer prices to fall 0.5% this fiscal year to next March and stay well below its 2% target through early 2023.

The central bank holds its next policy-setting meeting Sept. 16-17.

Friday’s data came after a batch of indicators confirmed weak demand at home and abroad, with exports posting a fifth consecutive month of double-digit falls and a surprise drop in core machinery orders pointing to fragile capital expenditure.

Japan’s economy, the world’s third-largest, suffered a record annualised contraction of 27.8% in April-June as lockdowns through late May aimed at containing the pandemic dampened business activity and crushed private consumption.

Analysts expect any rebound in the current quarter to be modest, with fears of a second wave of infections potentially hitting spending and prolonging a long stretch of deflation.

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

Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME