Japan and Deflation Continue To Be Best Of Friends

by Stephan Smith on October 1, 2010

Japan is still struggling to ward off its economic plague, deflation. This plague has skewed corporate growth for the worst and suppressed the Japanese export based economy. The muscular Japanese Yen continues its merciless assault of the on the 6 letter word every company wants to see – profit.

Japanese Flag

During the month of August 2010, the consumer price index [CPI] increased by 0.3 percent over the previous month but is down by 0.9 percent over the year. Bad news for the already struggling Japanese economy.

Down ChartEducation was the major player in the deflationary trend over the year, for it decreased by a whopping 13 percent over the year and remained stable over the previous month. Furniture and household utensils was also a major mover as it fell 0.7 percent over the previous month and fell further by 4.4 percent over the year.

The city of Tokyo isn’t doing any better with its CPI increasing by 0.3 percent over the previous month but falling by 0.6 percent over the year. The Bank of Japan has been doing everything that it can to fight off deflation, but from what I can tell, deflation is a better fighter.

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