Japan’s April consumer price index down 0.1%

June 1, 2009
By Ken Worsley

On Friday, the Ministry of Internal Affairs and Communications announced that Japan’s consumer price index had fallen 0.1% in April. April’s figures matched that of March, and thus a decline in Japan’s consumer prices has been seen for two consecutive months.

As Japan includes energy prices as part of its core CPI, it’s always helpful to look at what the CPI looks like with energy stripped out. Here’s a breakdown of CPI categories for April:

April general nationwide consumer price index: -0.1%
April general nationwide consumer price index (excluding rent): -0.1%
April nationwide core CPI (excluding fresh food): -0.1%
April nationwide consumer price index (excluding fresh food and energy): -0.4%

Once again, with fresh food and energy costs stripped out (”core core CPI”), we see signs of stronger deflationary pressure.

Let’s take a look at how individual categories contributed to January’s CPI:

Food +1.6%
Education +0.8%
Fuel, light and water charges +0.2%

Housing -0.1%
Miscellaneous -0.2%
Clothes and footwear -0.3%
Medical care -0.3%
Furniture and household utensils -0.9%
Transportation and communication -2.0%
Reading and recreation -2.2%

Is Japan caught in what could become a serious deflation trap? Household spending is still on the decline (more on that to come later), jobs per applicant are at an all-time low and unemployment crept up 0.2% to hit a five year high of 5% in April. Psychology also comes into play; continued price decreases and massive price cuts at retailers might lead consumers to think it “pays to wait” when it comes to making purchases. And, while much has been made of increases in industrial output (up 5.2% in April), it is still about 30% lower than it was in October of last year.

Filed Under Consumer Price Index, Economic Reports