September 30, 2009

August consumer prices down 2.4 percent

Japan's August consumer prices, hit by falling wages and rising unemployment, fell a record 2.4 percent year-on-year, the government said.

The decline in the core consumer price index, which does not include fresh food prices, renewed concerns about deflation at a time when the world's second largest economy has just emerged from its worst post-war recession.

The August number, the sixth straight monthly decline, matched the average market forecast in a Kyodo News survey, the news agency said.

Kyodo reported Japan experienced deflation in the 1990s and again earlier this decade, followed by the latest recession, which ended in the April-June quarter. However, the recovery since then remains weak.

Deflationary pressures hit company profits, forcing companies to cut production and wages. On the other side, price declines induce consumers to put off buying, thus steepening the spiral.