Japan exit from deflation getting clearer

Tokyo

THE strongest indication yet that the Bank of Japan's battle against deflation may be succeeding came yesterday with news that the so-called core-core inflation index rose in October compared to a year ago - marking the first such increase in five years and at the fastest pace in 15 years.

Significantly, this particular index excludes not only food but also imported energy prices, which have been rising rapidly in Japan as a result of the weak yen, thus pushing up the overall rate of consumer prices in recent months. Meanwhile, the yen continued its downward slide against most major currencies yesterday in an accelerating trend which economists say will also tend to push up inflation as the cost of imported intermediate inputs leads to rises in the price of finished products.