Japanese deflation worst on record

[Naveed Yaseen]

TOKYO: Japan saw a fourth straight month of record deflation in August as weak domestic demand hindered a recovery from the worst recession in decades, data showed on Tuesday.

With rising unemployment weighing on consumer spending, the new government may need to take fresh pump-priming measures to ensure the world’s number two economy stays on a recovery path, analysts said.

Japan’s core consumer prices dropped 2.4 per cent in August from a year earlier, the steepest decline since comparable data became available in 1971, the government said.

Core prices, which exclude those of volatile fresh food, fell for a sixth straight month, after a 2.2pc decline in July. Compared with the previous month, however, prices were flat in August. “The deflationary trend is spreading because consumer spending is weakening,” due to falling salaries and worker bonuses, said Hideyuki Araki, an economist.

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