Tokyo December core consumer prices fall at fastest pace in over 10 years

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© Reuters. People wearing protective masks after an outbreak of coronavirus (COVID-19) are reflected in the mirror of a Tokyo shopping mall

TOKYO (Reuters) – Core consumer prices in Tokyo fell at a rapid pace for more than a decade in December, while Japan’s job market remained subdued in November, increasing the risk of returning to deflation, which the coronavirus pandemic is hampering.

Friday’s weak price data follows nationwide data last week, showing the fastest decline since the end of 2010 in November, when the Bank of Japan unveiled a plan last week to examine more effective ways to reach 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, public data show.

That compared with economists’ median estimate for an annual decline of 0.8% and elaborated from a decline of 0.7% in November. The decline in December was the fastest slowdown since September 2010, when consumer prices fell 1.0%.

The data, which is a leading indicator of nationwide price trends, intensifies the challenge for politicians who want to revive growth after a steep pandemic-driven decline in production earlier this year.

Separate data showed that seasonally adjusted unemployment fell to 2.9%, bettering the median forecast of 3.1%. In October, the number of unemployed was 3.1%.

The ratio of jobs to applicants was 1.06 from the previous month’s 1.04, according to Labor Department data, not far from about the 7-year low of 1.03 released in September.

Japan’s economy recovered in July-September from the worst post-war contraction in the second quarter, but the third wave of coronavirus infections could undermine economic revival.

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