Thursday, July 30, 2009

Record Deflation Hits Japan

WSJ reports:

Japan's core consumer price index fell at its fastest pace on record for the second straight month in June, while the jobless rate rose to near its all-time high, troubling trends that economists say could complicate any economic recovery.

The data come as other recent indicators have shown the corporate sector appearing to get in better shape as Japan's export markets recover and firms increase production. But falling prices and increasing unemployment are likely to worsen in the months ahead, and those could hurt the overall economy, analysts say.

The core CPI, which excludes volatile fresh food prices, fell 1.7% on year in June, surpassing the 1.1% slide in May, the Ministry of Internal Affairs and Communications said Friday. Core prices have now fallen for four straight months.

The result is likely to fuel concerns that the world's second biggest economy is headed for deflation, a prolonged period of damaging price falls, just three years after emerging from the last such period.

Source: Stat.GO.JP

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