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Consumer prices in Japan fall for seventh straight month

Long stuck in a battle against deflation, signs are not good for the world’s third largest economy. There are calls for the Bank of Japan to push back their inflation target.

Economic growth continues to falter in Japan as consumer prices fell in Japan for the seventh consecutive month, the Japanese government announced Friday.

Excluding volatile fresh food costs, core consumer prices fell 0.5 percent year-on-year. While on projection with the market forecast, this puts the Bank of Japan's 2 percent inflation target set in April 2013 even further out of reach. The current deadline is set for March 2018.

Pushing back the deadline

The Mainichi Shimbum, one of Japan's largest newspapers, reported the Bank of Japan is considering postponing the deadline and would likely make a decision at a policy meeting next week.

"Falling energy prices,as well as the impact of the yen's appreciation, continued pressuring CPI figures," said Michinori Naruse, an analyst at the Japan Research Institute. "Under this situation, the Bank of Japan has no choice but to delay the deadline of the target."

A quintessential part of Japanese Prime Minister Shinzo Abe's economic revival policy, the Bank of Japan introduced an aggressive monetary easing campaign and bond-purchase program meant to charge the economy. However, economists are increasingly writing off Japanese Prime Minister Shinzo Abe's spend-for-growth policies, commonly dubbed Abenomics.

Efforts put to work, to the test

The Japanese government has tried other tactics to stimulate the sluggish economy too. The government raised the country's sales tax in April 2014 from five percent to eight percent, but that has resulted in a lower domestic demand. A second increase originally scheduled for April 2017 has since been pushed back to October 2019.

The Japanese government announced a 28 trillion yen ($266 billion, 244 billion-euro) package in July after the Brexit vote in June which caused the yen to climb.

Tokyo stocks gained ground Friday morning as the yen's fall to a three-month low against the dollar caused a jump in buying shares in companies which export.

kbd/jm (AFP, AP, dpa, Reuters)

 

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