TOKYO – Japan’s consumer price index (CPI) fell by 0.7% in October compared to a year ago, its third consecutive month of decline and the sharpest year-on-year drop in nearly a decade, the government said on Friday.
Compared to September, prices in October fell by 0.2%, according to data released by the Statistics Bureau of the Ministry of Internal Affairs and Communications.
The October drop of this indicator, which excludes fresh food prices due to their volatility, has kept out of reach the 2% inflation target set by the Bank of Japan (BoJ), which launched a monetary easing program in 2013 to achieve that objective.
In fact, a 0.7% decline has not been seen since March 2011, when Japan was hit by a powerful earthquake and a subsequent tsunami that triggered the nuclear disaster at the Fukushima plant.
Japan ended 2019 with an inflation of 0.6% and 2018 with an annual rate of inflation of 0.9%.
With all items included, the CPI declined by 0.4% in October with respect to the same month in 2019.
As for the sectors that contributed the most to the change in CPI in October, culture and leisure posted a year-on-year decrease of 4.0%, while food rose by 1.1%.
The decline in the leisure sector is linked to the “Go To Travel” campaign launched by the Japanese government at the end of July, subsidizing 35% of domestic travel expenses to stimulate demand and help the tourism industry recover from the impact of the epidemic, which has led the country to keep its borders closed to foreign tourism.
In its most recent outlook for the economy, the Bank of Japan forecasts that prices will decline by 0.6% in the fiscal year ending on March 31, 2021.