It is shown from Japan consumer price Index that their economy is moving towards deflation the overall sales show that the consumption of different commodities might not be supporting prices. The government has announced to pass a budget for 2009/10 probably on Friday. Government is facing immense pressure to spend more in order to stimulate consumer price index.

The main reason of this deflation is a slide in oil prices as the government makes efforts to pull out the country from deepening recession period.

There has been a larger fall in prices than what was expected in February retail sales that are yet another bad sign for the exports, as they are Japan’s main engine of growth.
Japanese inflation rate remains fixed in February, but economists warned that the country will face the deflation as soon as the global downturn hits demand at home and abroad.

In December the figure of the core Consumer Price Index (CPI) rises 0.2% but become flat in January, in this CPI the volatile fresh food prices were excluded. The CPI remains unchanged from a year earlier although it was expected that there would be a small drop.
Prices slid by 0.1 percent on per year basis in the “core-core” index, which excludes the fresh food and energy prices.

It was analyzed by the economists that Japan will soon face deflation that will last till next year due to the sharp fall in the demand for its commodities domestically as well as overseas subjected by the worldwide downturn.

The world’s number two economy is going to pass its deepest recession period since World War II. It is due to the fact that it showed its worst performance in almost 35 years in the last quarter of 2008, shrinking day by day at an annualized pace of 12.1 %.
There is a huge decline in the global demand for Japan’s cars, televisions and other high-tech goods. This is the reason that exports almost halved last month as compared to the last year, and that is a record fall up till now.

Sources

Reuters, Associated Press

Technorati Tags: breaking news,economic news,cpi,deflation,economy,japan

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