Japan Inflation Falls for 9th Straight Month

Japan’s consumer prices fell for the ninth straight month in November, official data showed Tuesday, while household spending declined and unemployment ticked up.

It was a further blow to efforts from the government and the Bank of Japan to pump up the world’s number three economy with massive public spending and aggressive monetary easing, Bloomberg reported.

Prime Minister Shinzo Abe came to office in late 2012 and launched a growth plan—a mix of massive monetary easing, government spending and red-tape slashing. But economists are increasingly writing off the “Abenomics” spend-for-growth policy.

Core consumer prices declined 0.4% on-year, the internal affairs ministry said. There was a forecast of a 0.3% fall among private economists.

Tokyo officials have blamed external factors, such as falling energy prices and uncertainty related to emerging economies, for their failure to achieve a promised 2% inflation target. Last month, the central bank said it expected to hit 2% inflation by March 2019, four years later than its original target and the latest in a string of delays.

Under deflation, general price falls can discourage companies from making capital investments, while also slowing production. Deflation can also discourage spending by consumers, who might postpone purchases until prices drop further or save money, creating further pressure on businesses.

“When you look at CPI along with the consumer spending data, you see domestic demand itself is weak,” Hiroaki Muto, chief economist at Tokai Tokyo Research Centre, told Bloomberg News. “Exports and production are recovering but consumers haven’t loosened their purse strings,” he said. “I don’t see anywhere the kind of dynamism that will make two percent inflation achievable,” Muto said.

The internal affairs ministry also said that Japan’s household spending fell for the ninth consecutive month, declining 1.5% in November from a year ago.

The nation’s unemployment rate edged up to 3.1% in November from the 3% registered in October, the ministry said.

BoJ Governor Haruhiko Kuroda has repeatedly voiced his optimism about the economy and his commitment with the solid US economy while emerging economies also moderately pick up.

In a speech on Monday Kuroda said consumption should gradually improve, while citing “a significant fall in crude oil prices” as negatively impacting prices in Japan. It “has been a tough year, both for businesses and the bank (of Japan),” Kuroda said of 2016 in a speech to a gathering hosted by Keidanren, Japan’s largest business lobby.