Japanese consumer prices fell at the fastest pace on record last month, data showed yesterday, stoking fears that the world’s second-largest economy is set for another long bout of deflation.
The steep decline in prices came despite growing hopes that the Japanese economy has come through the worst of its deepest recession on record.
Core consumer prices fell 1.1 percent last month compared with year earlier, the sharpest decline since comparable records began in 1970, the government said.
“We must carefully manage the economy so that it does not collapse further and enter into a deflationary spiral,” Japanese Finance Minister Kaoru Yosano said.
Core prices, which exclude those of volatile fresh food, fell for the third straight month.
The decline reflected weak domestic demand and the impact of lower oil costs, said Hiroshi Watanabe, an economist at the Daiwa Institute of Research.
“Deflation is taking hold,” he said, suggesting the Japanese economy would likely remain frail for the foreseeable future.
While lower energy costs are good news for many consumers and companies, analysts said it was worrying that deflation appears to be taking root across the broader economy, in part because of sluggish wages.
Japan was stuck in a deflationary spiral for years after its asset price bubble burst in the early 1990s, leaving the country mired in a long recession and prompting Japan’s central bank to slash interest rates to almost zero.
Deflation eroded corporate earnings and encouraged consumers to delay their spending in the hope that prices would fall further.
Consumer prices are likely to show bigger year-on-year declines in the coming months because of weak domestic demand, analysts said.
“It looks like Japan is heading for another lengthy period of deflation,” Macquarie Securities economist Richard Jerram said.
Against this backdrop, the Bank of Japan looks set to hold its key interest rate at the current low level of 0.1 percent for “a lengthy period,” he added.
Japan’s economy suffered its worst contraction on record in the first quarter of this year, shrinking at an annualized pace of 14.2 percent as exports collapsed.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS