Friday, June 26, 2009

Japan Inflation in Record Drop

Figures of Japan inflation rate are likely to show that inflation in Japan remained negative in May. The drop in prices for food and energy as well as with weak demand at home and abroad raised deflation in the first economy in Asia. Prices of goods also dropped for the third consequent month. Prices in Japan fell by the most on record last month, bringing fears of a new deflation, as official data from the Ministry of Finance shows .
Consumer prices fell 1.1% in May compared to same month a year ago, the most since records began in 1970. Japan was previously trapped in a deflationary spiral, where prices of goods kept falling, in the 1990s. To sum up the analyst`s forecasts, the say economy management should avoid collapse into deflationary spiral. Analysts consider deflation to be damaging to an economy because consumers delay purchasing until prices fall further. This factor drives down prices more.
Economic output and trading fall if there is little consumer spending. According to the latest data has the worst stage of recession for Japan may be over, the drop in consumer prices follows the worst recession in the economy of Japan.

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