The consumer price index continued to slide, with a 1.1 percent drop in July as deflationary pressure persisted for the 17th month in a row, the government said Friday.
Compared with a year earlier, the pace of decline in the core nationwide CPI, which excludes volatile fresh food prices, grew from the 1.0 percent drop in June as gasoline prices dropped. The headline reading matched the average market forecast projected in a Kyodo News survey.
While a government official said there were no obvious signs that the yen’s summer surge affected the latest data, analysts warned that recent moves in the currency market could produce downward pressure in the future.
The CPI stood at 99.0 against the base of 100 for 2005, the Internal Affairs and Communications Ministry said in the preliminary report, noting it’s the first time the pace has accelerated in three months.
By product, gasoline prices rose 7.4 percent from a year earlier but more slowly compared with June, when gas was up 13.6 percent. Prices of nonperishable foods, including biscuits and cooking oil, meanwhile fell 1.4 percent.
Norio Miyagawa, senior economist at Mizuho Securities Research and Consulting Co., said the yen’s recent strength could influence the CPI because it will likely cause prices of imported items, including gasoline and some foods, to fall.
“Considering such factors, the deflationary pressure is likely to remain for a while. I believe the basic trend will be for the CPI to drop at a slower pace,” Miyagawa said.
The ministry also released an August flash report for Tokyo’s core CPI, a leading indicator of prices across Japan. The core CPI for Tokyo’s 23 wards probably fell 1.1 percent from the previous August, it said, or slower than the average projection of 1.2 percent.
It also said in a separate report that monthly spending by households in July rose a price-adjusted 1.1 percent from a year earlier to ¥285,274.
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