TOKYO: Japan‘s core consumer prices marked their eighth straight month of annual declines in October, illustrating the sheer scale of the central bank’s struggle to beat deflation and stagnant growth with diminishing policy options. The data will keep policymakers under pressure to do more to stimulate the economy, with fiscal spending likely the more preferred option as three years of aggressive easing by the Bank of Japan failed to accelerate inflation to its 2% target.
With downward pressure from energy price declines easing and the yen’s recent falls seen pushing up import costs, however, some analysts expect consumer prices to rebound early next year. The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, fell 0.4% in October from a year earlier after a 0.5% drop in September, matching a median market forecast, government data showed on Friday.
While falling gasoline and electricity prices continued to drag down inflation, nearly 60% of items making up the index saw prices rise, the data showed. “We still think that underlying inflation will fall a touch further in coming months in response to the sharp falls in import prices in previous months,” said Marcel Thieliant, senior Japan economist at Capital Economics.
