Deflationary pressures are intensifying in Japan, again.
According to data released by the Japanese government on Friday, core CPI, that which excludes fresh food prices, fell by 0.4% in the 12 months to May.
The figure, in line with expectations, marked the steepest drop in prices since May 2013. In annualised terms, prices have now fallen for three consecutive months.
Suggesting that deflation is likely to persist for sometime yet, core consumer prices in Tokyo fell by 0.5% from June 2015, unchanged from the level seen in May.
Given this is released one month ahead of the national figure, it is a reasonable lead indicator on what to expect in other parts of the country.
So called core-core inflation, more akin to core CPI measures used in other nations give it excludes movements in food and energy prices, rose by 0.6% over the same period, decelerating from the 0.7% pace recorded in the year to April.
Including all items, headline inflation fell by 0.5% from May 2015, unchanged from the rate seen in April.
The weak price data will do little to dispel the view that the Bank of Japan will deliver additional monetary stimulus to the Japanese economy, perhaps as early as its upcoming meeting on July 15-16.
Still, given what it has already implemented, one has to question what further stimulus will deliver given it’s failed to lift inflationary pressures.
The saying “pushing on a piece of string”, comes to mind.