The price index continues to fall! Japan's economy is recovering steadily

Japan's core consumer price index fell for a sixth straight month in January , but the pace of decline slowed, alleviating some of policymakers' concerns about the coronavirus weighing on the economy.

Still , weak domestic demand means the Bank of Japan's priority is to avoid deflation, unlike inflation in other countries such as the United States .

Data released on Friday showed the core consumer price index, which includes refined petroleum products but excludes volatile fresh food prices, fell 0.6% in January from a year earlier, compared with market expectations for a 0.7% drop.

Data shows that driven by the stay-at-home policy, prices of durable goods have risen, with air conditioners rising by 7.2% and microwave ovens rising by 12.2%.

The so-called “core” CPI, which removes the impact of energy and fresh food costs, rose 0.1% year-on-year after three straight months of declines .

In addition, Japan's economy expanded more than expected in the fourth quarter of 2020 as a rebound in overseas demand boosted exports and capital spending .

According to data on February 15 , the annualized index from October to December 2020 rose 12.7%, exceeding the market average expectation of 9.5%.

But the recovery has slowed from the third quarter’s robust pace as Japan declared another state of emergency and policymakers face the challenge of preventing the spread of the virus without undermining a fragile economic recovery , especially in the struggling consumer sector.

"The situation is so dire that Japan cannot avoid negative growth in the first quarter," said a senior economist at Shinkin Central Bank Research . "There is a high probability of a repeated cycle of coronavirus infections this year, which means consumption is unlikely to recover at the expected pace."

Analysts say Japan's economy may have recovered 90% of the losses caused by the pandemic thanks to two consecutive quarters of strong growth .

"The Japanese economy is recovering much faster than initially expected , " said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

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