November 28, 2020

Japan’s CPI posted its first decline in more than three years in April

Japan’s consumer price index (CPI) fell 0.2% in April from a year earlier, marking its first decline in three years and four months, according to data released today by the government.

The decrease in the indicator, which excludes fresh food prices due to its high volatility, reflects the downward impact caused by the pandemic and the collapse in international oil prices.

This evolution comes after the interannual increase of 0.4% reaped in the month of March, and makes it difficult to meet the 2% inflation target set by the Bank of Japan (BoJ).

Compared to the previous month, prices fell 0.5%, according to data published this Friday by the Statistics Office of the Ministry of Interior and Communications.

The decrease in the cost of education, of 10% year-on-year, was the sharpest among the components of the indicator, followed by the decrease in expenses of electricity, water and gas, of 1.8%, and of transportation and communication, 1.2%.

The education sector has been affected by the closure of schools throughout Japan since the beginning of March, which was part of the measures taken by the Executive to contain the COVID-19 pandemic.

In contrast, the prices of furniture and utensils for the home increased by 2%, and those of clothing and footwear increased by 1.4%.

The Japanese central bank has been running a comprehensive monetary easing program since 2013 to bring inflation to around 2%, although this objective remains far from the reach of the third world economy due to different conjunctural factors.

Due to the effects of the pandemic on the Japanese economy, the BoJ estimates that in the year that began last April and will end in March of next year, the consumer price index will be in the negative between 0.7% and 0 ,3 %.

The Bank of Japan’s monetary policy board is holding an extraordinary meeting today to discuss possible new measures to inject liquidity into the small and medium-sized businesses hardest hit by the pandemic, which has caused the temporary closure of numerous businesses in Japan.


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