Japanese consumer prices fall for 17th consecutive month

[Newsjock]

Source: Reuters

Japan's core consumer prices marked their 17th straight month of annual declines in July in a sign that deflation remains deeply entrenched, boding ill for a fragile economy faced with a strong yen.

Japanese policymakers are struggling to put a cap on the surging yen, which hit a 15-year high against the dollar this week and threatens to derail an export-led recovery.

Analysts say the stronger yen and slowing economy may delay Japan's exit from deflation, putting pressure on the Bank of Japan to ease monetary policy further.

"The global economy isn't as strong as the Bank of Japan thinks, so oil prices won't give much of a boost to overall prices. Exports will also temporarily slump and slow Japan's economic recovery. Japan will thus remain in deflation for another two to three years," said Takeshi Minami, chief economist at Norinchukin Research Institute.

Read more: http://www.reuters.com/article/idUSTOE67P08Z20100827

[xchrom]

1. Recommend

[mike r]

2. Bad news for Japan

"Japan will thus remain in deflation for another two to three years"

[Art_from_Ark]

3. Depends on what kind of deflation one is referring to

As someone who has been involved with the Japanese economy for a few decades, I always wonder what someone means when they refer to "deflation" and "Japan" in the same sentence.

Are they talking about consumer prices? If so, then it's a mixed bag.

Electronics seem to be going down a bit, but that's due in large part to outsourcing production and achieving market saturation.

Gasoline prices go up, and they go down, but right now they are at almost the same level they were 17 years ago.

Electric and other utilities-- essentially at the same level they were 17 years ago.

Food prices? Down a bit, if you want to buy Chinese stuff. Other prices seem to be holding steady, although there seem to be more sales. Some non-Chinese imported stuff is going down a bit, like Australian and American beef, but a lot of other imports are not going down, despite the strong yen.

Interest rates? Interest on savings is next to nothing, but you can sometimes get a mortgage for 3%. Interest rates from private loan companies seem to be holding steady, as are credit card interest rates.