Japan's core consumer prices were stubbornly unchanged in July, dashing hopes for a modest rise as the coronavirus pandemic hit household demand ...
Japan's core consumer prices were stubbornly unchanged in July, dashing hopes for a modest rise as the coronavirus pandemic hit household demand and revived fears of a national plunge back into deflation.
A slow economic recovery from last quarter's record slump is expected to weigh on prices as consumer demand collapsed amid resurgent infections, which will in turn hit profits, jobs and business investment, analysts say.The spectre of a return to deflation will keep the Bank of Japan under pressure to continue massive monetary stimulus and maintain ultra-low interest rates to support government fiscal spending aimed at battling the health crisis.
"Japan is in a deflationary situation. As we shift towards 'new normal' following the coronavirus, the BOJ's 2per cent inflation target is increasingly losing reality." The BOJ projects consumer prices to fall 0.5per cent this fiscal year to next March and stay well below its 2per cent target through early 2023.Friday's data came after a batch of indicators confirmed weak demand at home and abroad, with exports posting a fifth consecutive month of double-digit falls and a surprise drop in core machinery orders pointing to fragile capital expenditure.
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