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Deflation still dogs Japan

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Deflation still dogs Japan
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Severe deflation continues to add to the uncertainty over Japan’s economy. The narrowest measure of consumer inflation – which excludes food and energy prices – fell again in May at a record level; it was down 1.6 percent from a year ago.

That means consumer demand is still weak and suggests slow wage growth and a large gap between supply and demand will slow an exit from deflation.

The data runs counter to the Bank of Japan’s forecast of a slight rise in core consumer prices in the fiscal year starting next April.