Japan's core consumer prices fell for the third consecutive month in the year to December, and mild deflation is expected to persist this year as energy prices stabilise and worries about Europe's debt crisis suppress wage growth and economic activity.
Core consumer prices declined an annual 0.1 percent, matching the median estimate, and a narrower measure that excludes both food and energy also fell in a sign that Japan continues to grapple with a strong yen, which pushes down import prices and makes exporters reluctant to raise salaries. Retail sales fell 1.2 pct in 2011, the first fall in two years, and auto and machinery equipment sales posted record falls in the series, which dates back to 1980. But sales rose an annual 2.5 percent in December, the biggest increase in 16 months.
Japan's core consumer price index (CPI) includes oil products but excludes volatile prices of fresh fruit, vegetables and seafood. The so-called core-core inflation index, which excludes food and energy prices and is similar to the core index used in the United States, fell 1.1 percent in the year to December.
Core consumer prices in Tokyo, available a month before the nation-wide data, fell 0.4 percent in the year to January. That compares with the median estimate for a 0.3 percent annual decline. Annual data showed the core CPI slipped 0.3 percent in 2011, the third straight yearly fall. Japan's consumer inflation has been around zero or minus for over a decade, except a 1.5 percent rise in 2008 on the back of an increase in energy prices.
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