Japan deflation persists; industrial output falls

As long as the dollar keeps falling relative to the yen I can spend more on the local economy! Cant say the same for the local population. I thought all the drastic economic reform measures were going to boost the economy significantly?

Rising import costs on everything from fuel to food, yet deflation persists.

We all know why this is happening. Companies are cost cutting on salaries to compensate for higher production costs. My own company has stopped all overtime but not lowered production targets or workload.

This was always one of the major flaws in Abenomics. The workers, in their sweat and salaries, will make up for the higher costs of production and resources.

Things are going to get a lot worse.

Optimism is not enough to put food on the table or gas in the car!

The article failed to mention that the declines were a few basis points BETTER than consensus estimates...

Is it me or the article seems to be redundant?

Shinjuku No YajuMay. 31, 2013 - 11:18AM JST

The article failed to mention that the declines were a few basis points BETTER than consensus estimates...

I think you've failed to understand the figures. Yes, industrial output did better than the consensus estimate, but the deflation figures are very very worrying.

If the BOJ, through its financial shock and awe, cannot curtail deflation now, what is going to happen this Autumn, when the shock and awe comes to an end?

There are not many cards left for the BOJ to play and besides it was always a badly thought out plan because it was always based on the premise that companies would increase base salaries and the union would demand them.

Obviously the opposite is happening, base salaries are taking the pain and rather than stimulate spending, it is going to lead to the opposite, which in itself might cause deflation to increase. The next round of pay negotiations, shunto, are not pencilled in until next February.

Japanese economic problems are and have always been structural, domestic over production with domestic consumer demand stifled by regulation and lifestyle (small housing and long working hours). Shirakawa was right and Kuroda is very quickly being proved to be out of his depth.

Title: industrial output falls

of course it will fall because production has been outsourced and people are using more imported goods

Apple products already cost a lot more: http://www.macrumors.com/2013/05/30/apple-raises-ipad-and-ipod-prices-in-japan/

So much for deflation...

Just printing more money isn't going to solve the problem.

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence (i.e. a bit less than 20 pounds), result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six (i.e. a bit more than 20 pounds), result misery."

Mr Micawber, in David Copperfield by Charles Dickens

Abenomics is working? all it is doing is inflating asset prices, but - as with QE - no real impact on real economy.

It's pretty standard liberal politics really. The rich get richer and the poor get shafted. Abenomics will not reduce deflation. It will only increase the class gap in Japan. Companies will maintain profit levels at the expense of laborers.

Nikkei has fallen 2000 points in 7 days yet not a word.

@ Dog I understand the figures fine. As I understand the position Japan will be in if Abe's third arrow doesn't hit the mark. All I'm saying is that while the figures released today indiciate that deflation continues, it is abating more than expected. Whether that trend continues will be up to the regulatory policy and incentives for investment/hiring/wage increases on the company level.

Abe makes Bernanke look like a joke!

Why do not we look at the data. http://www.stat.go.jp/data/cpi/sokuhou/tsuki/pdf/zenkoku.pdf

CPI (excluding fresh foods)

2012/04 100.2

2012/05 100.0

2012/06 99.6

2012/07 99.5

2012/08 99.6

2012/09 99.8

2012/10 99.8

2012/11 99.5

2012/12 99.4 :Abe took office on 12/26/2012

2013/01 99.1

2013/02 99.2

2013/03 99.5

2013/04 99.8

Though CPI lost 0.4 from previous year, his economic policy is just fine.

“No action, no growth"

"Get action, more broke" Japan post world growth came from foreign exports. Not from domestic consumption!

No surprises here, it's like expecting bountiful harvest by flooding barren land.

Correction as Japan post war growth instead of world growth

"Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence (i.e. a bit less than 20 pounds), result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six (i.e. a bit more than 20 pounds), result misery."

The parts in brackets make classic literature accessible, even to us Japan Today readers. Well done!

CH3CHOMay. 31, 2013 - 12:47PM JST

Though CPI lost 0.4 from previous year, his economic policy is just fine.

You ought to learn to read those statistics properly.

The nationwide CPI saw declining TV prices, which fell 16.4 percent in April, continued pressuring the overall prices. Prices of other durable goods including air conditioners and Blu-ray disc recorders also decreased,

The decline in the rate of deflation merely reflected rising electricity and gas prices because of the weakening Yen.... nothing has changed since Abe came to power

Dog

The decline in the rate of deflation merely reflected rising electricity and gas prices because of the weakening Yen.... nothing has changed since Abe came to power

Let us see. http://www.stat.go.jp/data/cpi/sokuhou/tsuki/pdf/zenkoku.pdf

CPI excluding foods and energy (change from prev month)

2012/04 98.9 (+0.2)

2012/05 98.8 (-0.1)

2012/06 98.6 (-0.2)

2012/07 98.4 (-0.2)

2012/08 98.5 (+0.1)

2012/09 98.5 (0.0)

2012/10 98.5 (0.0)

2012/11 98.2 (-0.3)

2012/12 98.0 (-0.2):Abe took office on 12/26/2012

2013/01 97.6 (-0.4)

2013/02 97.6 (0.0)

2013/03 98.0 (+0.4)

2013/04 98.4 (+0.4)

"But apart from a 4.2% increase in utilities costs, many other prices remained lower in April, the Management and Coordination Agency reported. It said the overall CPI, including food and energy prices, fell 0.7% from a year earlier as costs for vegetables, education and entertainment, fell, but rose 0.3% from the month before. Core inflation, excluding food prices, also rose 0.3% from a year earlier."

Where do they shop, at De-Nial Super?

Prices of some goods SHOULD go down, especially as newer products are introduced or production levels increase. CPI-based analyses are not what real people experience. Why exclude fuels and utilities? Those are directly relevant to actual spending. Oh, right, they don't jive with the official tale.

JeanValJeanMay.

Prices of some goods SHOULD go down, especially as newer products are introduced or production levels increase. CPI-based analyses are not what real people experience. Why exclude fuels and utilities? Those are directly relevant to actual spending. Oh, right, they don't jive with the official tale.

Exactly................................ This is what Nigelboy et al fail to realize with their sourcing of obscure Japanese websites. The internet is all things to all men and the skill of discussion on this new vehicle of exchange is to apply some common sense and objectivity.

It's obvious to anyone living a day to day existence in Japan that the only inflation so far introduced into Japan under Abe is the price inflation related to imports.

Domestic manufacturing is still well trapped in a deflationary trap because of overproduction and lack of domestic consumer demand. To keep their market share, domestic manufacturers are fearful to put up their prices and to keep their profits at the existing level, in the face of the rising costs of imported materials, they will cut salary costs. This isn't rocket science.

What prices do you all see that have been going down? The 100 yen shows have been around for awhile now... Starbucks coffee prices went up a few years ago, newspaper prices (though I almost never buy them) have gone up over the last decade. Juice prices have gone up over the lst 4 years. Taxi fares have gone up (started at ¥550 when I first moved here)...

Demand driven inflation is what the Japanese Government is trying to create. There is no rainbow without the rain. Abe and Kuroda have had less than six months to "have a go". With over a decade of stubborn deflation and low growth, the expectation of an "instant ramen" result to this problem is ignorance at best. Although economics can be subjective for the most part, at the very least, give a chance for the J-Curve effect to work its way through the Japanese economy.

randommanMay. 31, 2013 - 06:34PM JST

Demand driven inflation is what the Japanese Government is trying to create.

How can you make a demand when there is no need? Everyone in Japan has a flat screen TV, Air con and stereo for their 1LDK family unit.

Is this what Abenomics was supposed to do?

I was very optimistic of the abenomics, thinking the attack on the stagnant economy is in every Japanese' best interest. Bow I am kind of doubtful feeling nothing but higher taxes and living expenses. Abe is strongly urging every company to raise wages to help boost the economy, HOWEVER on the contrary, his gov't is ctting off fed/government workers big time time in their salaries plus a hike in tax and lessened benefits. I am just wondering, why don't he start with the honest taxpayers to get the hike and feel of abenomics' dynamics which are the gov't workers?

Summer bonuses were revised upward. Works in earnest it is next year. Japan has orders for many of the plant and transportation in the world. It does not come along soon. Japanese do not feel the fear anything.

Exactly................................ This is what Nigelboy et al fail to realize with their sourcing of obscure Japanese websites. The internet is all things to all men and the skill of discussion on this new vehicle of exchange is to apply some common sense and objectivity.

Calling me out when I haven't even posted a single message. Must hit a nerve.

Looking at CH3CO's link versus the article which is just comparing the figures from the same period last year, the CPI at the end of 2012 fell almost a percentage point. Since Abe instituted his plan, the CPI (excluding food and energy) increased 0.8%. For some unknown reason, you bring up TV which represents fraction of the CPI (97 out of 10K) which indicates how little it effects the overall CPI figures.

Simply comparing April of last year figures when the deflation continued throughout the year under Noda is misleading.

Everything is not as it seems.

Dog and I have been very skeptical on 2% inflation target of Abenomics.

Abenomics that is primary relying on boosting inflation expectations to achieve the central bank's price target is already failing and it will not be attainable. It only could lead to a rise in bond yields and harm the financial system if not controlled. What Japan needs today is a structural change in economic model and a bang in R&D.

Only an idiot would believe Japan's "we are still in recession" story.