Japan's CPI falls again, extending longest streak since 2011

A woman looks at items outside an outlet store at a shopping district in Tokyo.
A woman looks at items outside an outlet store at a shopping district in Tokyo. PHOTO: REUTERS

TOKYO (BLOOMBERG) - Japan's consumer prices fell for an eighth straight month - the longest streak of declines since 2009-2011, underlining how distant the nation is from achieving its 2 per cent inflation target.

Consumer prices excluding fresh food, the Bank of Japan's primary gauge of inflation, dropped 0.4 per cent in October from a year earlier.

Overall consumer prices rose 0.1 per cent, with a spike in fresh food prices compensating for continued falls in energy costs.

Consumer prices excluding food and energy rose 0.2 per cent.

The continued fall in prices underscores the struggle to break a cycle that's reinforced by weak gains in wages, poor consumer sentiment and retailers who compete fiercely through discounting.

Even after Governor Haruhiko Kuroda pledged to overshoot the inflation target, households and companies have yet to fully shake off their "deflationary mindset".

For the fiscal year through March, the bank expects prices to drop 0.1 per cent, a stark contrast from its prediction of a 2.1 per cent gain in April 2014. There are expectations that the government may increase fiscal spending next year as the BOJ struggles.

One bright spot may be the impact of Mr Donald Trump's victory in the US election, which has weakened the yen, creating inflationary pressures through higher import prices, while also boosting corporate profits in Japan.