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Japan says deflation has returned Japan says deflation has returned
(11 minutes later)
Deflation has returned to the Japanese economy for the first time since 2006, the government has warned.Deflation has returned to the Japanese economy for the first time since 2006, the government has warned.
The Cabinet Office said the falling prices could hurt the recovery of the economy, which left recession in the second quarter of this year.The Cabinet Office said the falling prices could hurt the recovery of the economy, which left recession in the second quarter of this year.
The government's announcement came as the Japanese central bank kept interest rates on hold at 0.1%.The government's announcement came as the Japanese central bank kept interest rates on hold at 0.1%.
The Bank of Japan said the Japanese economy was continuing to be helped by policy measures at home and abroad.The Bank of Japan said the Japanese economy was continuing to be helped by policy measures at home and abroad.
Japan's economy grew by 4.8% in the July-September period - the second consecutive quarter of growth.Japan's economy grew by 4.8% in the July-September period - the second consecutive quarter of growth.
'Future discussions''Future discussions'
Some investors think the government wants the central bank to do more to stop prices from falling. The Cabinet Office said in a statement that "Japan is in a mild deflationary situation".
"We have no specific ideas in mind at the moment," said Keisuke Tsumura, parliamentary secretary of the Cabinet Office. The recent price falls are not right, and worrisome Finance Minister Hirohisa Fujii class="" href="/2/hi/business/7754487.stm">What is deflation? class="" href="/2/hi/business/7955931.stm">Japan's economic battle with deflation
Keisuke Tsumura, parliamentary secretary of the Cabinet Office, said the government would now work with the central bank to tackle the situation, but that no plans had yet been decided.
"We have no specific ideas in mind at the moment," he said.
"It will depend on how discussions develop in the future.""It will depend on how discussions develop in the future."
Finance Minister Hirohisa Fujii said the situation was a concern.
"The recent price falls are not right, and worrisome," he said.
"This is one of the major policy issues right now."
Deflation is, as it sounds, the opposite of inflation, meaning that the general level of prices in a country are falling.Deflation is, as it sounds, the opposite of inflation, meaning that the general level of prices in a country are falling.
Declining prices might sound like good news for consumers, but in fact this is bad for everyone.Declining prices might sound like good news for consumers, but in fact this is bad for everyone.
As people wait for prices to fall still further before buying consumer goods, it leads to a vicious circle of decreased spending and increased unemployment.As people wait for prices to fall still further before buying consumer goods, it leads to a vicious circle of decreased spending and increased unemployment.