Japanese Consumer Prices fall 0.4% in May

Japanese manufacturers' confidence deteriorated during the previous month while service-sector sentiment slowed down from three months ago due to weak consumption, confirming fears for a fragile economy affected by a strong yen and weak overseas demand. Another release confirmed that household spending dropped for the third month in a row in May, but Japanese bank sentiment reached its lowest point in 3 and a half years. Japan's consumer prices went down 0.4% in May from a year earlier for the third straight month mostly due to the lower crude oil prices, showing the biggest drop in more than three years. Meanwhile, the core consumer price index remained at 103.0 versus the 2010 base of 100.

 

In the meantime, economists are worried that Japanese economic outlook could worsen, which could spur the BOJ to act. Moreover, the stated above data did not reflect the effects of the UK Brexit referendum which was held during the previous week. The yen, in turn, has strengthened 3.2% after the UK vote, thus, making Japanese exports less competitive and attractive.