Japanese core consumer prices fell 2.3 percent in September from a year earlier as the economy is mired in deflation due to weak final demand on top of slide in oil prices. While the retreat from last year's spike in energy costs has continued to weigh on price comparisons, an index stripping out both energy and food prices showed deflationary pressure was mounting.
The so-called core-core inflation index, similar to the core index used in the United States, fell 1.0 percent in September from the same month a year ago after declining 0.9 percent in August. The drop in the core consumer price index, which excludes volatile fresh fruit, vegetable and seafood prices but includes those of oil products, was smaller than a median market forecast, and followed a record 2.4 percent drop in August.
It was the seventh straight month of annual falls in the index Core consumer prices in Tokyo, available a month before the nation-wide data, fell a record 2.2 percent in October from a year earlier, more than a market forecast for a 2.1 percent decline, the same pace as a record drop in September.
Japan's economy returned to growth in the second quarter, pulling out of its longest recession since World War Two, but economists say still deteriorating job markets pose threats particularly if recovery in global economy proves weak.