Higher Energy Costs Lead to Surprise Increase in Japan’s Consumer Prices

A sharp increase in energy costs resulted in an increase in consumer prices in Japan as core consumer prices – which do not include food items – rose 0.1 percent in July compared to the same month one year ago. Japanese manufacturers have been struggling with falling prices following the devastation of the tsunami earlier this year and the lingering effects of the global financial crisis.

Despite the slight gain in prices for July, this is not expected to signal a reversal and deflation is expected to remain a concern.

“Consumer prices are unlikely to rise much and will hover around zero as commodity price rises are slowing,” said Junko Nishioka of RBS Securities in Tokyo. “Durable goods prices are also expected to fall with inventory building up and weak sales likely to trigger further price competition.”

Source: BBC News

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