Updated on November 27, 2020
Japanese capital sees prices drop most in more than 8 years as pain from COVID-19 persists
- Tokyo core CPI marks biggest annual decline since May 2012
- Data suggests nationwide consumer prices remain low
TOKYO: Consumer staples prices in Tokyo suffered their biggest annual decline in more than eight years, data showed on Friday, indicating that the blow to consumption by the coronavirus crisis has continued to increase deflationary pressure on the economy.
The data, which is seen as a leading indicator of nationwide price trends, bolsters market expectations that inflation will stay away from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to float on a low note as any economic recovery will be subdued,” said the Dai-ichi Life Research Institute, which expects nationwide basic consumer prices. fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for the Japanese capital, which includes petroleum products but excludes fresh food prices, fell 0.7% in November from a year earlier, according to the government data, corresponding to a median market forecast.
It followed a 0.5% drop in October and marked the largest annual decline since May 2012, underscoring the challenge policymakers face in tackling the headwinds on growth from COVID-19.
Falling fuel prices and the impact of a government campaign offering discounts on domestic travel weighed on consumer prices in Tokyo, the data showed.
Japan’s economy grew in July-September after a record post-war recession in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and crippled business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping the pressure on policymakers to maintain or even step up stimulus.