TOKYO (Reuters) – Core consumer prices in Tokyo dropped at the fastest pace in more than a decade in December while Japan’s jobs market remained subdued in November, raising the risks of a return to deflation as the coronavirus pandemic hammers demand.
Friday’s weak price data follows nationwide data last week showing the fastest slump since late 2010 in November, as the Bank of Japan unveiled a plan last week to examine more effective ways to achieve its elusive 2% inflation target.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.9% in December from a year earlier, government data showed.
That compared with economists’ median estimate for a 0.8% annual fall and deepened from a 0.7% decline in November. The December drop was the fastest downturn since September 2010, when core consumer prices slumped 1.0%.
The data, a leading indicator of nationwide price trends, intensifies the challenge for policymakers looking to revive growth following a steep pandemic-driven downturn in output earlier in the year.
Separate data showed the seasonally adjusted unemployment rate fell to 2.9%, better the median forecast of 3.1%. In October, the jobless rate stood at 3.1%.
The jobs-to-applicants ratio stood at 1.06 from the previous month’s 1.04, labour ministry data showed, not far from about 7-year low of 1.03 posted in September.
Japan’s economy recovered in July-September from its worst postwar contraction in the second quarter but the third wave of the coronavirus infections could undermine the economic revival.
(Reporting by Kaori Kaneko; Editing by William Mallard)
