- Takeshi Minami, chief economist at Norinchukin Research Institute
Japan's consumer prices declined for a third straight month, while retail sales dropped more than expected, adding to signs the nation's economy continues to struggle to recover after devastating effect of the sales tax hike in April. The data came out at a crucial time for Japan's Prime Minister Shinzo Abe, who is trying to gain public support of his growth strategy, as he heads into election next month. The national core consumer price index, which strips out volatile fresh food, but includes oil products, came in at an annual 2.9% in October, down from 3.0% reported a month earlier, equivalent to a 0.9% rise excluding the effects of April's tax lift. Analysts remain sceptical of the BoJ ability to get inflation to 2% in the fiscal year from April 2015. The central bank deployed additional monetary stimulus last month, with the Governor Haruhiko Kuroda underlying bank's intention to expand stimulus further if needed to reach 2% inflation over the next year.
Meanwhile, a separate report showed industrial production improved in October, increasing 02% from the previous month and beating economists' expectations for a 0.6% drop. In addition to that, retail sales rose 1.4% in the year to October, overshooting analysts' predictions for a 1.2% gain. However, household spending declined for a seventh consecutive month, falling 4.0% in the year to October, albeit slower than a 5.6% annual drop a month earlier.
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