Japan’s core consumer prices fell 1.2 percent last month from a year earlier, marking a full year of grinding deflation and suggesting the Bank of Japan (BOJ) may need to ease monetary policy again in the next few months.
The so-called core-core consumer price index, Japan’s narrowest measure of consumer inflation that strips out both energy and volatile food costs, also logged a near-record annual fall as weak household demand forced companies to cut prices.
Many analysts expect the debt-laden government, worried about an economic downturn ahead of an upper house election likely in July, to prod the central bank into easing policy further.
Japanese Finance Minister Naoto Kan hinted as much by saying more efforts are needed to stop price declines.
The 1.2 percent fall in the core consumer price index, which includes oil products but excludes volatile food costs, matched a median market forecast. The pace of drop slowed slightly from January, but retailers remain under pressure to cut prices while coping with a profit squeeze to woo consumers who are tightening belts amid falling wages.
The core-core inflation index, similar to the core index used in the US, fell 1.1 percent from a year earlier, after record falls of 1.2 percent in January and December.
“The pace of decline in prices is slowing somewhat, but prices are still falling,” Kan told reporters after the data. “More efforts will be needed in order to escape deflation.”
Kan also said he wanted to push forward debate on how to use ¥1 trillion (US$10.78 billion) in reserves in the budget for the fiscal year from April 1, which the parliament passed a day earlier.
Kan stopped short of saying the government plans to launch extra stimulus, because Japan’s outstanding debt is almost twice the size of its GDP, leaving little room for fiscal spending.
Ratings agencies have threatened Japan with a downgrade if it doesn’t show more fiscal discipline, so the government has been leaning on the BOJ to support the economy.
The BOJ loosened monetary policy earlier this month by doubling to ¥20 trillion the amount of loans it offers commercial banks for three months at 0.1 percent, which is the benchmark rate. It is likely introduce a similar six-month funding scheme in the next few months to lower term rates further, economists say.
The central bank’s policy board next meets on April 6 and 7, and then on April 30, when it reviews policy and its economic and price forecasts in a twice-yearly report.
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