Gov't declares Japan has slipped into deflation

Friday 20th November, 11:20 AM JST

TOKYO —

Japan has slipped into deflation, Deputy Prime Minister Naoto Kan said Friday, adding to concerns about a solid recovery for the world’s second-largest economy. Kan, also state minister for economic and fiscal policy, said the government believes that Japan is in ‘‘a deflationary situation’’ and the role to be played by monetary policies is very important.

At a separate news conference, Finance Minister Hirohisa Fujii said he is deeply concerned about deflation in Japan, but there is no magic prescription for the challenge from a fiscal front as public spending will not help raise prices. ‘‘We are aware of the serious risk,’’ Fujii said, when asked about his interpretation of mounting deflationary pressures in Japan. ‘‘The current situation is not what it should be.’‘

Fujii said addressing deflation is ‘‘a very important point’’ in running the economy. But he said that fiscal policies in principle lack the capacity to fix the economy.

‘‘Public spending has propping-up effects,’’ he said. ‘‘But when it comes to improving the economy, in the words of (economist John Maynard) Keynes, it has to come from the private sector.’’

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Latest 15 of 24 Total Comments Show All

NationalistRE at 02:26 PM JST - 20th November

Remember jobs and inflation? they were big in the 80s
Noliving at 02:27 PM JST - 20th November

Yeah, I hate everything being cheaper... The fat cats want some inflation to fuel their debt-driven greed!

What it actually means is that a the economy is shrinking which means the country is producing less which leads to higher unemployment and less tax revenue. Deflation is rarely if ever good for anyone!
NationalistRE at 02:38 PM JST - 20th November

How about enacting laws that force Japanese banks to limit their investment in overseas assets? For years banks here refuse to give credit to small and medium businesses but readily buy 'samurai bonds' offered by foreign financial institutions for a hefty 5-6% spread in profit.
thepro at 02:39 PM JST - 20th November

I wish somebody would inflate our salaries
elbudamexicano at 02:40 PM JST - 20th November

Oh no! Deflation?? Great! Everything in this country has been over priced for way too long! It is cheaper to fly to LAX round trip than to go from Haneda to Okinawa? Haneda to Hokkaido? It is even cheaper to go to LAX than to use the Japanese shinkansen (bullet train)! Does this make any sense? Hell no! Finally the markets are adjusting to the reality of the Japanese economy, very simple economics 101!
ronaldk at 02:59 PM JST - 20th November

Really? I want to go to LAX, when is a good time?
larguero at 03:10 PM JST - 20th November

Deflation is a consequence of the open of Japan markets to a wide variety of foreign products. Besides, the strong yen makes import goods cheaper, and the stores want to sell despite the recession, so prices go down.Being flexible to international prices is fine, I think.
gogogo at 06:39 PM JST - 20th November

ahhh just ignore it and it will go away :)
roomtemperature at 07:01 PM JST - 20th November

Let's just take elbudamexicano's remarks with a grain of salt. I just checked the exaggeration he/she spouted with a departure in the remaining of this month or next month. I can tell you.....the "information" provided by him/here is totally nonsense!
islands at 09:41 PM JST - 20th November

Buy buy buy!
cracaphat at 02:11 AM JST - 21st November

The acknowledgement is either one of two things: 1/.Unlike the LDP who thru their pork barrel politics caused an unprecedented 20 year recession in Japan,the DPJ is trying to be forthright with the people by laying the cards on the table,showing how bad things had been before they took office or 2/ Their own version of PB,offering money to raise your kids,free highway use,free education etc, when with a declining population leading to a major shortfall in revenue, had led them to belatedly realize that the funds were not there for all that they proposed.And in true blue Japanese manner use the deflationary report to justify bailing on some money-giving proposals and have that infamous "Save Face" go to move at the same time.
M51T at 03:18 AM JST - 21st November

Deputy PM Kan is saying 'deflation' which is softer than saying 'Japan is on the precipice of a death spiral'.
Shumatsu_Samurai at 06:57 PM JST - 21st November

Why is it that so many people here have a child's understanding of economics?

Deflation is very, very bad. Just do some basic internet research before you start cheering, guys.
Seiryu at 04:21 AM JST - 23rd November

Deflation has its problems, but a softer JPY (and USD) can actually be beneficial. Exports ahoy!
hanadecaka at 11:35 AM JST - 23rd November

All the rates are fixed in the 1$ equivalent 135yen,even old apartment and mansion with dirty.Train tickets are very much expensive why government can not down the price of commuters it was done before 5years back but still not yet done.Commodities which product in third countries are getting cheap rate if imported from there.Naturally it will be deflation,but good for consumers.Japanese salary cheapest in among the develop nations and paying high price for accmodation of such dirty apartment and mansions.