Japan: Prices Up, But Deflation Not Over
Japan’s main price gauge rose for the first time in more than two years, but the country’s battle with deflation is far from over.
Core consumer prices rose 0.6 percent in the year to April, marking the first rise since December 2008.
Factors such as rising commodity costs were behind the increase in the Consumer Price Index, but data shows underlying prices and consumption in Japan still remain weak following the March earthquake.
Core consumer prices are likely to continue to edge upward due to high oil prices, in line with Bank of Japan forecasts issued last month.
But economists say the rise in the headline price gauge does not mean Japan will escape from nagging deflation, given a weak labor market and low corporate hiring.
Company profits have also been squeezed by poor consumer sentiment, with many Japanese households still unwilling to spend and searching for cheaper goods.