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Japanese consumer prices drop again

Japanese consumer prices drop againJapanese consumer prices continue to drop in July, fifth month in a row, the latest data shows.

It adds a lot of pressure on the government to expand its already massive stimulus programme. The data came worse than estimates had suggested and marked the biggest annual drop in more than three years.

The consumer price index in July fell by 0.5% compared with a year earlier. The data came short after weak economic grows numbers were released earlier this month despite government’s aggressive spending policy.

For years Tokyo is trying to raise inflation in order to stimulate spending and boost the economy. But inflation has remained significantly lower than the central bank's 2% goal.

Strengthening of yen has pushed down import prices together with weak household spending.

Analysts expect the rate to remain low or even fall further.

"As such, inflation expectations may weaken further in coming months," Marcel Thieliant, senior economist at Capital Economics said in a note.
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