Don't Miss .. .. .. .. .. ...
Japan Jan core CPI falls 0.3 pct yr-on-yr; down 0.8 pct vs Dec
(AFX News)
Friday, February 25, 2005
afxpress.com
Japan's core consumer price index (CPI) in January fell 0.3 pct from a year earlier, the government reported, showing the country remains dogged by deflation and no change in the central bank's ultra-loose credit policy is in sight.
The Bank of Japan (BoJ) has declared it will maintain its super-loose credit stance, keeping short-term interest rates at virtually zero, until the nationwide core CPI rate remains above zero for a prolonged period, shows no signs of dropping and the economy is growing.
That rate has declined -- or remained flat several months recently -- since April 1998, plunging the world's second-largest economy into a deflationary spiral which it keeps struggling to escape.
Last week the government reported the Japanese economy shrank for the third consecutive quarter in the October-December period, pushing the economy back into its fourth recession in a decade.
The January decline in the core CPI, which excludes volatile fresh food prices and thus gives a clearer indication of the underlying rate of deflation, matched the consensus estimate in a Nihon Keizai Shimbun survey of 22 brokerages and economic research institutes. The estimates ranged from minus 0.5 pct to minus 0.2 pct. Compared to December, the core rate fell 0.8 pct in January, after rising 0.1 pct the previous month. The index for the overall change in prices nationwide in January fell 0.5 pct month-on-month, and by 0.1 pct from a year earlier.
The government also released CPI figures for the Tokyo metropolitan area for February. The data for metropolitan Tokyo, home to more than a fourth of the nation's population, comes out a month earlier than the nationwide data and is viewed as a leading indicator of price trends throughout Japan.
The core CPI for Tokyo fell 0.1 pct in February from the previous month, the Ministry of Internal Affairs and Communications said. Year-on-year, the Tokyo area core rate fell 0.5 pct, the 65th straight monthly decline.
The year-on-year decline also matched the consensus forecast in the Nihon Keizai survey. All 22 researchers surveyed forecast declines, with the estimates ranging from 0.7 pct to 0.3 pct. Including fresh food prices, Tokyo area consumer prices in February fell 0.2 pct month-on-month and by 0.5 pct from a year earlier.
´The February CPI change from January tends to show a decline due to seasonal factors, such as prices of fish and winter clothing bargain sales,´ said a ministry official.
But the year-on-year decline reflected falling prices for personal computers and air conditioners, and rate cuts for fixed-line phone services, showing price cutting continues to affect manufacturers and service-sector companies alike.
Prices of desk-top PCs have dropped 31.2 pct over the past year, and prices of laptop PCs by 28.4 pct. Those declines alone accounted for a 0.02 percentage point decline in the Tokyo area price index in February, the ministry said.
Fixed-line phone service prices tumbled 12.2 pct in February from a year earlier, a sign of the price cutting being driven by both technological changes and deregulation.
NTT East, one of two regional arms of the former domestic phone monopoly which still provides conventional phone service to most homes and offices, cut its fixed-line charges last month. It did so partially to stem a decline in subscribers to mobile service providers and to Internet Protocol phone networks. It also cut rates to bring them in line with the tariffs now offered by KDDI Inc and Softbank Corp, two companies allowed to enter the fixed-line service market through deregulation.
Tumbling prices played a central role in driving the Japanese economy into the three earlier recessions this past decade, by triggering steep declines in corporate profits, wages and employment.
Yet now, although the Japanese economy has again slipped into recession, many economists expect the downturn to prove mild and short-lived because corporate profits remain high, with many more companies expected to increase hiring and wages than cut both.
Rising prices for oil products and some perishable food products served to minimize the drop in the overall CPI rate.
Reflecting the surge over the past year in global oil prices, the price of regular gasoline was up 10.3 pct, and of kerosene by 14.5 pct, in Tokyo this month from a year earlier.
Fresh vegetable prices were up 1.6 pct year-on-year.
´But the rate of increase slowed sharply from the past couple of months, as an extraordinary number of typhoons damaged last year's harvest, affecting prices,´ a ministry official said.
fxstreet.com |
