Japan is heading towards deflation. Analysts forecast that possibly in September the country will reach it. The growth rates of consumer inflation are almost zero according to official statistics. For instance, core consumer price index rose only 0.3% in April, while in March, it grew 2.2% on a yearly basis. However, in general, prices didn’t change at all if excluding consequences of a sales tax hike in April 2014. The country’s government encountered a difficult situation and had to prepare the population for a potential fall in prices. Given low inflation rates in March, one could hope that Japan wouldn’t come into deflation. However, now it is almost inevitable. Most economists expect that it will happen in September. On the other hand, one may think that a slowdown in price growth is good for consumers. However, it is not true. Cautious Japanese postpone buying in hope that prices will keep on decreasing, the statistics shows. The April consumer spending suddenly tumbled 1.3% after a drop of 10.6% a month earlier. As for positive news, the unemployment rate is falling, thus raising hope for situation’s improvement in the future.
