TOKYO, Aug. 26 (Xinhua) -- Japan's core consumer prices declined for a fifth straight month in July, the biggest fall in three years, according to government figures on Friday, adding more pressure on the central bank to ease its monetary policy and boost its reflationary efforts.
The 0.5 percent drop in July was attributable to a slump in prices for crude oil. The decline marked the biggest annual decline since March 2013, the Ministry of Internal Affairs and Communications said.
The latest figures came on the heels of a revised 0.4 percent drop a month earlier and median market analysts believe the Bank of Japan (BOJ) will now have little choice but to expand its already hefty easing program following its policy board meeting towards the end of next month.
The ministry's data showed that the core consumer price index, which excludes volatile fresh food prices, stood at 99.6 against the 2015 base of 100.
The latest figures reinforces a predominant market view that Prime Minister Shinzo Abe's stimulus programs, as part of his "Abenomics" multi-pronged, aggressive economic policies, have come up short and failed to spur both business and consumer spending.
Despite the latest installment of "Abenomics," Japan's economy stalled in the April-June quarter, expanding an annualized 0.2 percent in real terms with the figure coming in below economists' expectations.
The second quarter growth of the world's third-largest economy missed market expectations for between a 0.4 and a 0.7 percent expansion in the recording period, with the government pointing to a slowdown in overseas economies, the strength of the yen and slumping private consumption as all contributing to the stagnation.
But sluggish exports have also been weighing on the economy, underscoring withdrawing overseas demand and the negative impact of the yen's ongoing appreciation, while consumer spending, which accounts for 60 percent of total gross domestic product has also been largely flat of late.
The failure of "Abenomics" has been in the spotlight of late, with the weaker-than-expected growth data causing leading economists to question his policies' effects on deflation, market participation and consumer spending.
Increased corporate profits are also not being converted into expenditure, with capex slipping 0.4 percent in the quarter, as businesses perceive the domestic market as being weak and are reluctant to increase spending, investments or increase wages.
The BOJ, for its part, has flooded the markets with new money over the past three years, yet a perpetually firm yen has dragged down imports costs and zapped overseas and domestic demand, with households here also tightening their purse strings, as the BOJ's lofty 2 percent inflation target, the target date of which has already been delayed, looks increasingly testing.
Following a slide in global prices for crude oil, energy prices plummeted 11.3 percent from a year earlier in July, the ministry said, and gasoline prices tumbled 14.8 percent. Electricity fees dropped 8.2 percent from a year earlier, the government's data also showed.
For Tokyo's 23 wards in April, a data set widely regarded as a precursor of nationwide prices in the coming months, the core CPI retreated 0.4 percent from a year earlier to 99.7, marking the sixth consecutive month of decline, according to the data released by the ministry.
The latest data set includes the ministry's new base year of 2015 and the components that comprise the indices have been altered by the government to more accurately represent consumer spending trends. The ministry makes such upgrades once every five years. Enditem
