Japan Reports Weak Economic Data

31 Dec 2012

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Japan has reported weak economic data, underlining the challenges the new government faces in reviving growth in the world's third largest economy.

Industrial output fell in November as demand for exports continued to slow. Consumer prices also dipped, indicating that deflation continues to remain a hurdle in boosting domestic demand.

Japan has been seeking to spur domestic demand to offset the decline in exports, which have fallen for six months in a row, and sustain growth.

Japan has been battling with deflation for many years. It has hurt attempts by Japanese policymakers to boost domesticconsumption as consumers and businesses tend to put off purchases in the hope of getting a cheaper deal later on.

According to the latest data, the core consumer prices index, which excludes fresh food, fell 0.1 per cent in November, from a year earlier.

"This is a clear indication that deflation is really ingrained in Japanese economy and it is inevitable that the central bank will have to do something to tackle it," Martin Schulz of Fujitsu Research Institute told the BBC.

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