The Japanese Central Bank mentioned in their November report for Economic and Financial Developments that it expects prices to slow their fall at the end of the year. Even with all the stimulus programs from the goverment the Bank acknowledges that business conditions will remain weak. Japan is an exporting nation and the weakening of the USD resulted in an adverse apreciation of the JPY which in turn has made Japanese export less attractive to foreign consumers.
“The year-on-year pace of decline in consumer prices is expected to moderate toward the year-end as the effects of the prices of petroleum products abate,” the bank said. It failed to mention that last week the domestic demand deflator, a key measure of deflation, dropped by 2.6 percent, its highest fall in more than half a century.
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