For the third consecutive month in the year to December, the core consumer prices of Japan fell and mild deflation is expected to persist this year as energy prices stabilize and worries about the debt crisis of Europe suppress wage growth and economic activity.
Core consumer prices declined an annual 0.1 percent and retail sales fell 1.2 pct in 2011, the first fall in two years.
“The stagnation of other developed countries is likely to push back the timing of Japan beating deflation from the mid-2010s as originally thought to the late 2010s,” said Takeshi Minami, chief economist at Norinchukin Research Institute. “The BOJ will need to keep its ultra-easy stance in the meantime. If risks from the euro-zone debt crisis heighten, it could move for an additional easing in the near term.”
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