Commenting on the latest consumer prices data from Japan, Azusa Kato, a BNP Paribas economist said as negative inflation rates are also projected for the U.S. and Eurozone through 2010, an age of global deflation in approaching.
Friday, official data showed that Japan's core consumer price index was unchanged in February from a year earlier, while the overall CPI was down 0.1% on-year.
The economist pointed out that the 10-Percent Trimmed Mean CPI again declined in February and the share of the CPI's price gainers fell, while that of price decliners rose. These are clear indications that inflation is steadily trending lower.
Citing the faster pace of decline since February 2006 shown by the US-like core CPI for Tokyo, which excludes energy and food, but alcohol, the economist said it is clear that the widening output gap is causing price decline to spread beyond food and petroleum products.
BNP Paribas estimates that Japan's national core CPI should fall by 0.2% in March, for the first on-year decline since September 2007. The core inflation rate is expected to show faster deceleration leading to a minus inflation rate of more than 1% taking root for the foreseeable future.
The group revised its annual price forecasts to show a 1.2% fall in 2009 and 1% decline in 2010. The U.S.-like national core CPI is expected to drop 0.6% in 2009 and 1.5% in 2010.
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