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Published: Friday November 27, 2009 MYT 11:37:00 AM
Updated: Friday November 27, 2009 MYT 11:43:43 AM

Japan said Friday deflation accelerated in Oct


TOKYO: Deflation in Japan accelerated in October, with core consumer prices down 2.2 percent from a year earlier, the government said Friday.

The jobless rate, however, improved to 5.1 percent.

The key consumer price index, which excludes volatile fresh food prices, has fallen for eight straight months, posing a growing threat to Japan's fragile economic recovery.

The result was slightly worse than Kyodo news agency's forecast for a 2 percent decline.

Japan's government last week highlighted the danger of deflation for the first time in three years. While hardly a surprise, it showed that leaders of the world's second biggest economy are clearly worried about the trend.

Falling prices, which plagued Japan during its "Lost Decade" in the 1990s, may sound like a good thing. But deflation can hamper economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases.

It also can increase debt burdens.

Prices are expected to continue falling.

The core consumer price index for Tokyo, seen as a barometer for prices nationwide, fell 1.9 percent.

On the labor front, the government released better news.

Japan's unemployment rate improved to 5.1 percent in October, better than 5.3 percent the previous month and July's record high of 5.7 percent.

The number of jobless rose almost 35 percent from a year earlier to 3.44 million, while the number of employed people fell 1.8 percent to 62.71 million, according to the Ministry of Internal Affairs and Communications.

The ratio of job offers to job seekers stood at 0.44, up for the second month, the labor ministry said separately.

The figure means there were 44 jobs available for every 100 job seekers.

Also, monthly household spending rose 1.6 percent in October from a year earlier, the government said.

The figure is a key indicator of private consumption, which accounts for about 60 percent of Japan's economy. - AP


For more on deflation from The Daily Yomiuri, a partner with The Star in the Asia News Network, click here


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