Japan's Consumer Price Decline Eases for a Second Month, May Stall on Yen
“The moderation of core prices will continue, but only at an extremely slow pace,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. “Prices won’t reach positive territory at least until 2012.” Photographer: Tomohiro Ohsumi/Bloomberg
Japan’s consumer-price declines eased for a second month in June, improvements that may stall as a stronger yen lowers import costs.
Prices excluding fresh food slid 1 percent from a year earlier, easing from 1.2 percent in May, the statistics bureau said today in Tokyo. The median estimate of 27 economists surveyed by Bloomberg was for a 1.1 percent drop.
Bank of Japan officials say price decreases will continue to moderate as the economy expands. Even so, the central bank may face political pressure to ease monetary policy in an effort to stem the currency’s advance and quell deflation, said economist Junko Nishioka.
“A strong yen hinders prices from rising,” Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo, said before the report. “An appreciating yen may add more pressure on the BOJ” to implement extra steps, including the expansion of a 20 trillion yen ($230 billion) fund-supply program.
BOJ board member Hidetoshi Kamezaki said this week that a rising yen may hurt exporters’ competitiveness and the central bank will act “proactively” to combat deflation. The yen has climbed 8.3 percent against the dollar and 10 percent versus the euro in the past three months.
BOJ policy makers this month revised their core-price forecast for the year ending March 2011 to a drop of 0.4 percent from an April projection of a 0.5 percent decline. They kept next fiscal year’s forecast for an increase of 0.1 percent.
“The moderation of core prices will continue, but only at an extremely slow pace,” said Yoshimasa Maruyama, a senior economist at Itochu Corp. in Tokyo. “Prices won’t reach positive territory at least until 2012.”
Retailers are discounting to encourage spending among consumers whose wages slid for 21 consecutive months to February. Japan’s three biggest beef-bowl restaurant chains, Yoshinoya Holdings Co., Matsuya Foods Co. and Zensho Co., this week slashed prices temporarily. The three companies launched similar campaigns in April.
To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
Rate These Stories
Rate this Page