Japan logs ninth monthly price fall in November
TOKYO: Japan’s consumer prices fell for the ninth straight month in November, official data showed yesterday, while household spending declined and unemployment ticked up.
It was a further blow to efforts from the government and the Bank of Japan to pump up the world’s number three economy with massive public spending and aggressive monetary easing.
Prime Minister Shinzo Abe came to office in late 2012 and launched a growth plan – a mix of massive monetary easing, government spending and red-tape slashing.
But economists are increasingly writing off the ‘Abenomics’ spendfor-growth policy.
Core consumer prices declined 0.4 per cent on-year, the internal affairs ministry said. There was a forecast of a 0.3 per cent fall among private economists.
Tokyo officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for their failure to achieve a promised two per cent inflation target.
Last month, the central bank said it expected to hit two per cent inflation by March 2019 – four years later than its original target and the latest in a string of delays.
Under deflation, general price falls can discourage companies from making capital investments, while also slowing production.
Deflation can also discourage spending by consumers, who might postpone purchases until prices drop further or save money, creating further pressure on businesses.
“When you look at CPI along with the consumer spending data, you see domestic demand itself is weak,” Hiroaki Muto, chief economist at Tokai Tokyo Research Centre, told Bloomberg News.
“Exports and production are recovering but consumers haven’t loosened their purse strings,” he said.
“I don’t see anywhere the kind of dynamism that will make two per cent inflation achievable,” Muto said.
The internal affairs ministry also said that Japan’s household spending fell for the ninth consecutive month, declining 1.5 per cent in November from a year ago.
The nation’s unemployment rate edged up to 3.1 per cent in November from the three per cent registered in October, the ministry said. — AFP