Japan’s consumer prices fall for first time in 28 months

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Japan’s consumer prices declined 0.1 per cent in August from a year earlier for the first year-on-year fall in 28 months due mainly to plunging oil prices, the government said Friday.

The core consumer price index, which excludes fresh food, stood at 103.4 against a base of 100 for 2010, the Ministry of Internal Affairs and Communications said.

The annual inflation rate in August was further away from the 2-per-cent target set by the Bank of Japan more than two years ago. Japan has been in the throes of deflation for nearly two decades.

Friday’s report comes one day after Prime Minister Shinzo Abe declared at a news conference the economy “has come to a point where we can say that it is no longer in a deflationary condition. We are very close to overcoming deflation.”

Last week, Bank of Japan Governor Haruhiko Kuroda also projected an optimistic view of the world’s third-largest economy, saying the trend of rising prices has been picking up. But Friday’s report on the annual inflation rate in August showed otherwise.

In April 2013, the central bank introduced aggressive monetary easing steps to pull Japan out of a deflationary spiral as it aimed to achieve 2-per-cent inflation within about two years.

On Thursday, Abe vowed to step up economic policy measures with the aim of boosting Japan’s nominal gross domestic product to 600 trillion yen (5 trillion dollars).

“I would like to move toward new nation-building efforts with an eye to the future. We are now moving to the second stage of Abenomics,” the premier said, referring to his much-touted economic policy.

Abe became the premier for the second time in December 2012 and pledged to boost the economy.

However, the government said in early September the economy shrank at an annual rate of 1.2 per cent in the April-to-June period, the first contraction in three quarters amid sluggish consumer spending following last year’s sale tax hike.

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