— Japan Oct Core CPI -0.1% Vs MNI Median Forecast -0.1%
— Central Tokyo Nov CPI -0.5% Y/Y Vs Oct -0.4%
— Japan Oct CPI Energy Costs +6.1% Y/Y Vs Sep +6.4%

TOKYO (MNI) – Japan’s core consumer prices fell 0.1% in October,
posting the first year-on-year drop in four months, as the global
economic slowdown led to weaker support from energy costs and
price-cutting competition among retail electronics shops lingered, data
released Friday by the Ministry of Internal Affairs and Communications
showed.

But the October fall in the core CPI (excluding perishables) after
rising 0.2% on year in the previous two months was also due to a
technical reason.

The price-boosting effects of tobacco tax and casualty insurance
premium hikes that took effect in October 2010 ended in September. The
fading impact of the hikes pushed down the year-on-year change in
overall CPI by 0.32 percentage point in October.

Leading the price drops were markdowns in televisions and
refrigerators.

This unveils the fact that Japan remains in mild deflation, hit by
the continued negative output gap — excess supply and slack demand. In
addition, while the strong yen is boosting Japan’s purchasing power, it
is also lowering import prices, exerting downward pressure on CPI.

The October core reading matched the median economist forecast for
-0.1% in a Market News International survey.

In July, Japan’s core CPI, which excludes perishables but includes
energy, posted the first year-on-year gain since December 2008.

Total national CPI fell 0.2% on year in October after being
unchanged in September, also marking the first y/y drop in four months.

Overall energy costs in October rose 6.1% y/y, with the pace of
increase decelerating from +6.4% in September.

National CPI excluding food and energy, or the U.S. style core CPI,
fell 1.0% in October from a year earlier following a 0.4% fall in the
previous month.

Meanwhile, central Tokyo core CPI slumped 0.5% year-on-year in
November after a 0.4% decline in October, posting the largest drop since
-0.5% in April.

CPI figures date to 1970 under the 2010 base year.

The latest government survey on consumer confidence showed that
69.6% of people expected higher prices in a year’s time in October, up
from 67.2% in September, while the Bank of Japan said last month the
core consumer inflation will stay in the lower end of its zero to 1%
target range throughout fiscal 2013.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

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