Japan prices rise for first time in over 2 years

AP News
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Posted: May 27, 2011 7:39 AM
Japan prices rise for first time in over 2 years

Japan's consumer prices in April rose for the first time in more than two years on a spike in energy and tobacco prices, the government said Friday.

Japan's core consumer price index, which excludes fresh food, climbed 0.6 percent last month from a year earlier, marking the first year-on-year increase since December 2008, the Ministry of Internal Affairs and Communications said.

The rise in Japanese consumer prices was mainly due to a jump in gasoline and tobacco prices. The ministry said education costs were also higher in April. On a month-on-month basis, Japan's core consumer price index was up 0.4 percent last month.

But economist Hiroshi Watanabe at the Daiwa Institute of Research said the April increase in consumer prices does not mean Japan's economy has emerged from deflation.

"The April results were mainly lifted by temporary factors, such as a surge in tobacco prices. Overall, Japan's economy still remains under deflationary pressure as the economy has yet to post a steady recovery," he said.

The world's No. 3 economy has been battling periods of deflation _ or a steady decline in prices _ since the 1990s. Deflation is a burden as it can hamper economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases. It also can increase debt burdens.

Faced with tumbling output and exports following the March 11 earthquake and tsunami, Japan's economy recently slipped into a recession after contracting at an annualized rate of 3.7 percent in the January-March quarter.