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Is inflation cooling off at last?

Japan’s Core CPI Still in Negative During February

Posted Friday, March 19, 2021 by
Arslan Butt • 1 min read

The decline in core consumer prices across Japan eased lower for the second consecutive month during February on the back of an increase in fuel prices despite household spending remaining weak in the wake of the coronavirus crisis. Japan’s core CPI declined by 0.4% YoY last month, slightly better than the 0.6% drop seen in the previous month.

The core core CPI, which excludes the volatile food and energy prices, registered an increase by 0.2% in the month of February, up from the 0.1% rise registered in January. Core CPI continues to remain weak as households remain hesitant to step out and spend their money amid the economic uncertainties driven by the pandemic and emergency measures imposed by the government.

Japan’s economy has suffered severely on the back of US-China trade tensions, although it posted a slight improvement by late 2019. However, just as things started looking up for the world’s third largest economy, the coronavirus pandemic struck the world, sending Japan into lockdowns and triggering a sharp downturn as external demand and domestic consumption levels declined sharply.

Between April and June after the announcement of the first round of lockdowns, the Japanese economy suffered the most severe contraction seen since World War II. Economists have forecast yet another slowdown in the current quarter, and the weak inflation data serves to reaffirm this expectation further.

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