Prices decline at a record pace in Japan

Japan’s struggle against deflation became ever more urgent as consumer inflation fell at a record pace last month. From Reuters:

“…The so-called “core-core” consumer price index, which strips out the effect of volatile food and energy costs, fell 1.2 percent last month from a year earlier after a 1.0 percent drop in November, data showed. It was the biggest since drop since the series began in 1970…”

Of course, there is now renewed speculation on yet another stimulus package, currency intervention, and other monetary action. With the national debt almost double GDP, Japan’s options are more limited than ever.

Standard and Poor lowered Japan’s credit rating outlook earlier this week. An actual rating cut may drive interest rates up and further constrain the government’s options. Daniel Fisher describes Japan’s dire debt and economic outlook in Forbes: “The Global Debt Bomb.”

Reuters provides a graphic comparing inflation rates amongst Japan, the Eurozone, and the U.S. Click here.

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