Japan April Core CPI -0.2 pct YoY vs a Reuters poll -0.1 pct

Reuters reports that Japan's core consumer prices fell 0.2 per cent in April from a year earlier, government data showed on Friday.

Key notes

• April CPI excluding fresh food, energy prices +0.2 pct YoY - govt.
• April nationwide overall CPI +0.1 pct YoY - govt.
• April nationwide core CPI -0.2 pct YoY - govt (Reuters poll: -0.1 pct).

The core consumer price index, which includes oil products but excludes fresh food prices, compared with economists' median estimate for a 0.1 percent annual fall. Stripping away the effect of fresh food and energy, consumer prices rose 0.2 percent in April from a year ago.

It is of no surprise that years after Japan made a cautious recovery from its long deflationary spell, the world’s third-largest economy may be headed back into a cycle of falling prices. COVID-19  threatens a deep downturn and policymakers struggle for options.

The yen is a surplus currency, so it attracts a safe-haven bid, which is another double blow to Prime Minister Shinzo Abe, who has touted an end to stagnation as a key success of his Abenomics stimulus policies deployed in December 2012. Instead, a stronger currency will play havoc on exports while domestic demand as the pandemic hurts wage growth and jobs will also lead to a severe economic downturn. The nation is already in a technical recession.