Japan’s October CPI signals deflation

Japan’s core consumer-price index fell in October, signaling the return of deflation after four months of price gains, and raising fresh doubts about the Bank of Japan’s claim of a trend change in the price environment. Core CPI fell 0.1% in October.

Much of the core CPI decline is related to an increase in cigarette taxes and insurance premiums that were unveiled in the same month a year earlier.Gas and electricity charges were higher from a year earlier, reflecting higher prices for liquid natural gas as conventional power stations were throttled up to compensate as nuclear power stations throttled back.