Saturday, April 27, 2013

Consumer Prices Fall for Third Month as Deflation Lingers

Japan’s consumer prices fell for the eighth time in nine months, highlighting the challenges facing the Bank of Japan (8301) in reaching a 2 percent inflation target.

Consumer prices excluding fresh food fell 0.2 percent in January from a year earlier, the third-straight decline, the statistics bureau said in Tokyo today. The result matched the median estimate in a survey of 26 economists by Bloomberg News.

While a weaker yen improves the outlook for exporters and pushes up the prices of imported energy and commodities, continued price falls show the scale of the BOJ’s challenge in achieving 2 percent inflation. Prime Minister Shinzo Abe yesterday nominated Asian Development Bank President Haruhiko Kuroda to lead the BOJ, with the prospective governor saying last month that more easing is justified for 2013.

Japan’s economy will grow 1.8% this quarter according to the median estimate of economists surveyed by Bloomberg News, after contracting in April-to-December last year. Goldman Sachs Inc. in January raised its GDP forecast for the fiscal year starting in April to 2 percent.

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