Ja­pan suf­fers longest con­sumer price fall since 2011

Kuwait Times - - BUSINESS -


Ja­pan’s con­sumer prices fell in Oc­to­ber, gov­ern­ment data showed yes­ter­day, ex­tend­ing the longest string of de­clines in five years and un­der­scor­ing its strug­gles to conquer de­fla­tion. The weak in­fla­tion data-core prices ex­clud­ing fresh food fell 0.4 per­cent from a year ago-come sev­eral weeks af­ter Ja­pan’s cen­tral bank pushed back the time­line for hit­ting its 2.0 per­cent in­fla­tion tar­get.

The BoJ’s tar­get is a key part of Prime Min­is­ter Shinzo Abe’s fal­ter­ing bid to pump up the world’s num­ber three econ­omy. The coun­try has been strug­gling to re­verse a de­fla­tion­ary spi­ral of fall­ing prices and lack­lus­tre growth but Oc­to­ber’s data mark eight straight months of de­clines-the longest streak since 2011.

Bank of Ja­pan (BoJ) gov­er­nor Haruhiko Kuroda has pointed a fin­ger at weak crude prices as the chief cul­prit be­hind the weak­ness. Ja­pan’s prime min­is­ter hand-picked Kuroda to help drive his “Abe­nomics” growth blitz of big spend­ing, easy money and struc­tural re­forms, un­veiled in early 2013.

The pro­gram sharply weak­ened the yen-fat­ten­ing cor­po­rate prof­its-and set off a stock mar­ket rally that spurred hopes for the once-soar­ing econ­omy. But growth re­mains frag­ile while in­fla­tion is far below the BoJ’s tar­get. Ear­lier this month, the cen­tral bank said it ex­pected to hit two per­cent in­fla­tion by March 2019 — four years later than its orig­i­nal tar­get and the lat­est in a string of de­lays.

“What was sup­posed to be a quick two-year vic­tory has trans­formed into a pro­longed war of at­tri­tion that is set to drag on,” Ya­sunari Ueno, chief mar­ket econ­o­mist at Mizuho Se­cu­ri­ties, said in a com­men­tary be­fore yes­ter­day’s data were pub­lished. The bank’s price goals would be “dif­fi­cult to achieve”, said Ya­suhiro Taka­hashi, se­nior econ­o­mist at No­mura Se­cu­ri­ties.

“I’d say prices will turn into pos­i­tive ter­ri­tory even­tu­ally, but so far up­ward move­ment of prices... is still weak,” he said. “The rea­son be­hind the slow pace of price rises is be­cause the eco­nomic re­cov­ery is very slow.” The BoJ hoped that con­sumers would spend more if prices were ris­ing, per­suad­ing firms to ex­pand op­er­a­tions and get­ting the econ­omy hum­ming. But wage growth has fallen below ex­pec­ta­tions, mean­ing work­ers have less money to spend. Abe’s prom­ises to cut through red tape-the key third plank of Abe­nomics-have also been slow in com­ing. — AFP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.