consumer prices in Japan fell for a month 21 in November

consumer prices in Japan fell for a month 21 in November, a sign of sustained deflation may prompt the central bank to revise their price forecasts.

Consumer prices excluding fresh food fell 0.5 percent from a year earlier, the statistics bureau said today in Tokyo.
Entrenched deflation is weighing on the economy at risk for this quarter as the effects of stimulus spending Prime Minister Naoto Kan, vanishes. Miyako Suda, a policy maker of the Bank of Japan, said earlier this month persistent price declines will continue in the year from April, a view that conflicts with bank forecasts moderate inflation in the period.

"The BOJ will probably be forced to reconsider their price forecasts," said Mari Iwashita, chief market economist at Nikko Cordial Securities in Tokyo before the report. "It is very likely that the period ending deflation will be pushed back."

The outcome of the board of the Bank of Japan in core prices in October increased by 0.1 percent next fiscal year and 0.6 percent next year.

Also reduce the possibility of an end to deflation is the base change in the price index in August, BOJ Suda said. The statistics office of a redistribution of the basket of goods used to measure the CPI every five years, as Goldman Sachs Group Inc. estimates may decrease the rate of inflation at around 0.4 percentage point. The review of the last government pushed down prices on about half a percentage point.

Cutting forecasts

"Prices continue to fall, although the rate of decline is likely to moderate," said Jun Ishii, chief fixed income strategist at Mitsubishi UFJ Morgan Stanley in Tokyo. "The BOJ will likely have to cut its forecast for consumer prices after a reset, which can intensify deflationary expectations."

The central bank in October cut its key interest rate to the range of zero percent and 0.1 percent and pledged to maintain the policy until it can predict the steady price increases, members of the Council feel about 1 percent.

falling prices tend to erode corporate profits, putting pressure on wages, weakening consumption and making debts harder to repay. Deflation has affected Japan for more than a decade.

Companies are lowering prices to consumers in the economical system to loosen their wallets.

Zensho Co., a national chain of beef bowl restaurant, this month slashed prices by 11 percent to boost sales, its third price-cutting campaign this year.