Tokyo, Japan (BBN) – Core consumer prices in the world’s third largest economy, Japan, fell on an annual basis for the first time in over two years in August.
The core consumer price index (CPI), which includes oil but not fresh food prices, declined 0.1 per cent from a year ago – the first drop since April 2013, reports BBC.
The headline consumer price index rose 0.2 per cent from a year ago, but remained flat from the previous month.
Deflation fears have plagued Japan, putting pressure on policymakers.
Prime Minister Shinzo Abe and Japan’s central bank have pledged to get the economy out of the deflation it has been battling for years.
Even though the fall in prices last month was expected, economists said the latest reading would result in the Bank of Japan stepping up its pace of easing in October.
“CPI data continues to show a weak acceleration, which suggests that the Japanese central bank may need to do more,” said Bernard Aw, market strategist at trading firm IG.
“Even with this aggressive pace of asset buying, it is still nowhere near its 2% inflation target,” he added, referring to the central bank’s goal to reach that target in the first half of next year.
Backing that view, Marcel Thieliant, economist at Capital Economics added that on the whole the economy was struggling to return to growth after shrinking in the second quarter.
Japanese Economics Minister Akira Amari told the media on Friday that it was up to the central bank to take appropriate steps on monetary policy after the data came out.