By Kaori Kaneko
TOKYO (Reuters) – Japan’s core consumer prices fell at their fastest pace in almost four years in August, underscoring deflation risks and difficulties the country’s new prime minister faces in restoring growth in the world’s third-largest economy.
The weak consumer prices came after Bank of Japan governor Haruhiko Kuroda said on Thursday it would monitor not just price trends but jobs growth in guiding policy, signalling a readiness to ramp up stimulus if job losses heighten the risk of deflation.
Japan’s new premier Yoshihide Suga on Wednesday pledged to contain COVID-19 and retain his former boss’s “Abenomics” growth policies while pushing reforms such as deregulation and digitalisation.
The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, fell 0.4% in August from a year earlier, government data showed on Friday.
That compared with the median market forecast for a 0.4% decline and a flat reading in July and matched the level seen in November in 2016.
The main factor for the fall in the core CPI index was a price decline in accommodation and hotels after the government excluded people living or vacationing in Tokyo from domestic tourism promotions.
The government now plans to include Tokyo in the tourism campaign from next month.
The so-called core-core price index, which excludes food and energy prices and is closely tracked by the central bank as a narrower gauge of inflation, fell 0.1% in August, the first fall since March 2017. In July, the index gained 0.4%.
The economy shrank an annualised 28.1% in April-June, its worst postwar contraction.
(Reporting by Kaori Kaneko; Editing by Sam Holmes)
