Japan's Aug consumer prices fall at fastest pace in four years

[TOKYO] Japan's core consumer prices fell at their fastest pace in almost four years in August, underscoring deflation risks and difficulties the country's new prime minister faces in restoring growth in the world's third-largest economy.

The weak consumer prices came after Bank of Japan governor Haruhiko Kuroda said on Thursday it would monitor not just price trends but jobs growth in guiding policy, signalling a readiness to ramp up stimulus if job losses heighten the risk of deflation.

Japan's new premier Yoshihide Suga on Wednesday pledged to contain Covid-19 and retain his former boss's "Abenomics" growth policies while pushing reforms such as deregulation and digitalisation.

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, fell 0.4 per cent in August from a year earlier, government data showed on Friday.

That compared with the median market forecast for a 0.4 per cent decline and a flat reading in July and matched the level seen in November in 2016.

The main factor for the fall in the core CPI index was a price decline in accommodation and hotels after the government excluded people living or vacationing in Tokyo from domestic tourism promotions.

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The government now plans to include Tokyo in the tourism campaign from next month.

The so-called core-core price index, which excludes food and energy prices and is closely tracked by the central bank as a narrower gauge of inflation, fell 0.1 per cent in August, the first fall since March 2017. In July, the index gained 0.4 per cent.

The economy shrank an annualised 28.1 per cent in April-June, its worst postwar contraction.

REUTERS