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Last Updated: Friday, 25 June, 2004, 10:32 GMT 11:32 UK
Japan still battling deflation
Japanese shoppers
Prices of goods have yet to recover
Prices of Japanese goods continued to fall in May and June, an indication that deflation has not been curbed even though economic recovery is underway.

The Tokyo consumer price index was down 0.3% in May from a year earlier, the steepest fall in 11 months.

And initial indications of June figures, suggest that prices are still falling.

Some economists had predicted modest inflation in the world's second largest economy.

The Bank of Japan has said it would maintain its loose monetary policy to support a sustained recovery.

An interest rate hike is not expected for several months.

Prices were down even though the price in oil in Japan has risen.

But while some analysts said a return to inflation is just round the corner, others said they expected consumer goods prices to remain low until the end of the year.

"The inflation rate is very close to zero but still negative... I expect the negative margin to continue," said economist at BNP Paribas Securities Toru Sakane.


SEE ALSO:
Japan economy 'getting stronger'
28 May 04  |  Business
Retail woes hit Japan's recovery
27 May 04  |  Business
Japan 'set for gradual recovery'
20 May 04  |  Business
Optimism at 7-year high in Japan
01 Apr 04  |  Business


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