Japan May Face Deflationary Risks Again

  • The continuously spreading coronavirus pandemic has put the economies
    of developed countries around the world to a standstill and slashed
    social consumption and demand, leading to oil prices which failed to
    recover after falling to the bottom, and US stocks that hovers in bear
    market. Against this context, observers warn that deflation, the worst
    economic nightmare, may be lurking around, And Japan may be the first
    country to feel the shock.To get more news about WikiFX, you can visit wikifx news official website.

     

      Calculations based on factors such as oil prices, scheduled
    electricity prices and current exchange rate level suggest that as both
    gasoline prices and electricity prices drop, Japan ‘s inflation level
    will continue to be suppressed in the coming months. Moreover, if oil
    prices continue to fall, Japan ’s inflation rate may fall below zero as
    early as in April. According to Bloomberg's forecast, the factor of
    falling oil prices alone can make the main inflation indicators fall by
    0.1% in April and 0.2% in May. Since energy accounts for only 8% of the
    CPI(consumer price index) Basket of Goods, price changes of remaining
    products can still keep the inflation rate above zero. As Japan enters a
    state of emergency (from April 7 to May 6), utility companies will take
    falling oil prices into account in their pricing plans, and general
    consumer prices will further decline in the next few months.

     

      BNP Paribas, Barclays and Credit Suisse all forecast that Japan s
    inflation will be negative for most of the time this year and in the
    next two years. Judging from the current situation, Japan's economy
    faces high deflation risks. Due to the bleak economy, earnings of
    companies are breaking through the profitable bottom line, which will
    make businesses more cautious about investment, consumption and
    recruitment activities for a period of time.