Japanese unemployment has continued to rise, while prices continued to fall according to latest monthly data.
The nation is also maintaining the same old policy near-zero interest rate policy. The Bank of Japan said they would keep their key policy rate unchanged at 0.1%.
We probably shouldn’t expect a change from this for a long, long time. Japan has kept the printing press churning for quite some time now, yet prices keep falling, even after the modest economic rebound.
Japan’s seasonally adjusted jobless rate rose to 5 per cent in the first increase in five months. The figure is up from 4.9 per cent in February and missed Kyodo News agency’s forecast for the rate to be unchanged.
The number of jobless totaled 3.5 million during the month, up 4.5 per cent from a year earlier. Those with jobs fell 0.6 per cent to 62.1 million.
The numbers underscore a patchy recovery facing the world’s second biggest economy — but the slowest growing one in Asia. Robust growth in China and elsewhere in the region is fueling demand for Japanese cars and gadgets. Corporate profits are up, and business confidence is recovering.
Companies, however, remain cautious about spending. Workers have yet to see a major turnaround in jobs or wages, which managed a small rise in March.
Japan’s core consumer price index, which excludes prices of fresh food, declined 1.2 per cent in March from a year earlier. The result marked the 13th straight month of decline. Prices fell for a swathe of goods from fuel to furniture.
Lower prices may seem like a good thing, but deflation plagued Japan during its “Lost Decade” in the 1990s. It can hamper economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases. It also can increase debt burdens.
Core CPI for the Tokyo area, seen as a barometer of future price trends nationwide, retreated 1.9 per cent in April.
Just don’t forget, there’s still potential for Japan to spark hyperinflation out of nowhere. See how a Japanese hyperinflationary scenario would unfold here >
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