Business & Economy

Japan’s CPI records biggest decline in nearly 4 years in August

Tokyo, Sep 18 (efe-epa).- Japan’s consumer price index (CPI) decreased by 0.4 percent in August compared to a year earlier following two flat months and another two previous declines owing to the prolonged impact of the coronavirus pandemic, the government said Friday.

This is the steepest decline of the indicator since November 2016, when prices also fell by 0.4 percent.

The indicator, which excludes fresh food prices due to their volatility, also decreased by 0.4 percent with respect to the previous month, according to data published by the Statistics Bureau of the Ministry of Internal Affairs and Communications.

The downward trend of the index has kept out of reach the 2 percent inflation target set by the Bank of Japan (BoJ), which launched a monetary easing program in 2013 to achieve that objective.

The country ended 2019 with an inflation of 0.6 percent.

The factor that contributed most to the CPI’s decline in the eighth month of 2020 was the fall in the cost of education, of 10.3 percent year-on-year, followed by a reduction in the prices of culture and entertainment (-2.4 percent) and energy (-1.9 percent).

The sharpest increases were recorded in the prices of food, which rose 2.9 percent year-on-year and furniture, which increased by 2.8 percent.

The CPI had increased for 31 straight months until April and May, when it posted a 0.2 year-on-year decline in each of the months before remaining unchanged in June and July and falling again in August.

The decline is linked to the prolonged impact of the novel coronavirus epidemic, which has reduced consumption levels among the Japanese.

The Japanese government launched the “Go To Travel” campaign at the end of July, subsidizing 35 percent of domestic travel expenses to stimulate demand and help the tourism industry recover from the impact of the epidemic, which has led the country to keeps its borders closed to foreign tourism.

The program directly affected overall prices, a ministry official said at a press conference. Accommodation rates plummeted by 32 percent during that month.

“There seem to be no factors pushing up the CPI for the time being following the launch of the travel subsidy program and a recent slowdown in gasoline prices,” the official said, according to local news agency Kyodo.

Prices of kerosene and petrol in August fell by 10.9 percent and 6.3 percent year-on-year, respectively. EFE-EPA


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