Japan’s consumer price drop eases; weak demand restricts outlook

Japan’s core consumer prices posted another month of decline, hitting their sixth straight month of weak records in January. However, their pacing came slower than usual, bringing in some relief for policymakers as the economy suffers from the coronavirus crisis.

Core consumer prices recorded an annualized 0.6% contraction in January, government data showed on Friday. The figure came milder than the 0.7% drop expected by markets, placing lower than the 1.0% decrease seen in December.

In the fourth quarter, Japan’s economy recovered above expectations. It gained more momentum as a rebound in overseas demand greatly supported exports and capital spending. However, the reimplementation of coronavirus-related measures in January dimmed the outlook, prompting policymakers to resolve the crisis without compromising the country’s recovery.