Econintersect: Many places we have seen the two decades of deflation in Japan cited. What does the actual data indicate? Yesterday (31 May 2013) GEI News reported that 106 of the 148 months of the 21st century have seen year-over-year deflation for Japan. However, examination of the data indicates that the period of deflation started from a peak in CPI at 104.2 in November 1998. From that date, with stutter steps, CPI in Japan has declined 4.2% over 14 1/2 years to 99.7 reported for April 2013.
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The lowest point for the Japanese CPI has been reached twice in both October 2012 and February 2013. The 99.2 reading was a decline of 4.7% from the peak.
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Deflation covering 14 1/2 years may not be two decades, but it is certainly close enough that we should not quibble. And the way things are going for Japan a full 20 years could still be reached. They need more than 4.4% inflation to get above the 1998 CPI high point. Although the Japanese government has sworn to move heaven and earth to get inflation up to 2% annually, it is not clear how long it will take to get there, if they ever do.
Sources:
- Preliminary April 2013 CPI (Statistics Bureau of the Ministry of Internal Affairs and Communications, 31 May 2013)
- Japan Inflation Rate (Trading Economics, 31 May 2013)
- UPDATE 1-Japan deflation ebbs, output up; BOJ target still elusive (Reuters, 31 May 2013)
- Deflation and Consumer Prices in Japan (Laguna Beach Bikini)
- Japan: Deflation Continues (GEI News, 31 May 2013)
