Japan's consumer prices keep falling
Afp, Tokyo
Japan said Friday its consumer prices fell for a third straight month in April, although at a slower pace than before, as the world's second-largest economy struggles with stubborn deflationary pressures. Core consumer prices dropped by 0.1 percent last month from a year earlier, in line with market expectations, figures from the Ministry of Internal Affairs and Communications showed. The core consumer price index (CPI) for Tokyo alone in May -- seen as a leading indicator for national price trends -- was steady from a year earlier. After apparently exiting deflation last year, Japan has seen fresh drops in consumer prices since February, when they fell for the first time in 10 months. But prices showed signs of stabilising in April compared with March, when they had slid by 0.3 percent. "The exit from deflation is still in sight, but we still cannot say we are completely out of deflation," Economic and Fiscal Police Minister Hiroko Ota told a news conference. The drop was mainly due to lower prices of fuel and digital consumer products such as flat screen televisions, the ministry said. The decline in energy prices following last year's surge would likely continue for another few months, said Junichi Makino, an economist at the Daiwa Institute of Research. But the slower pace of decline in consumer prices in April and the recent rebound of oil prices on global commodity markets has raised hopes that Japan is still clawing its way out of deflation, helped by rising asset prices. "Generally speaking, prices are recovering gradually," said Tetsuro Okada, senior economist at Japan Research Institute. "Therefore, I don't think the third straight decline will be a major obstacle to make the Bank of Japan change its intentions to raise interest rates," Okada added. Bank of Japan governor Toshihiko Fukui has said interest rates need to go up slowly to head off the risk of an unsustainable boom. Last week he even said that the central bank could raise rates even if consumer prices are falling, but he faces political resistance to rapid monetary policy tightening. "Prospects for price moves are still unclear while Japanese indicators remain mixed (so) it's not easy for the Bank of Japan to make its monetary policies understood ahead of an expected rate hike," said Daiwa's Makino.
| 
