Japan Inflation:

https://www.yahoo.com/finance/news/soft-inflation-adds-japans-economic-021534487.html

Article:

TOKYO (Reuters) - Japan's annual core consumer inflation picked up only slightly in January, keeping the Bank of Japan under pressure to maintain its massive monetary stimulus to support a fragile economy saddled with weak growth and prices.

Stubbornly tame inflation is a worry for the world's third-largest economy as it grapples with a coronavirus outbreak and weak growth. The Bank of Japan is in no mood to top up its already huge monetary stimulus, fearing it would have little ammunition to battle the next financial crisis.

Comments and Ideas:

The idea of inflation, meaning increase in prices and or meaning increases in demand, has been a major source of worry or attention by the Bank of Japan for a while, lets say ten years and maybe even more the last five years with the so-called target of 2% in inflation.

But of course it hasn't happened and the BOJ even at one time recently like, it might never happen in the near future, but they will continue to pursue it as a goal.

Yes, and this has been said and reported in many articles the last few days/week, the BOJ may not have to tools, or whatever you want to call it to provide the needed stimulus that is going to be needed as this virus situation, even more and more, it beginning to affect all areas of the Japanese economy.

Article:

However, BOJ Governor Haruhiko Kuroda has said he would consider additional easing if the coronavirus outbreak significantly threatens Japan's economy and inflation, calling the flu-like virus the "biggest uncertainty" for the economy.

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, rose 0.8% in the year to January, led by gasoline costs, Ministry of Internal Affairs and Communications data showed. That followed a 0.7% gain in December and matched economists' median estimate.

Price trends in Japan would come under pressure from weak wage growth and sliding corporate profits, declines in tourism amid the new virus outbreak and a worsening Chinese economy that is weighing on global oil and commodity markets, said Yasunari Ueno, chief market economist at Mizuho Securities.

"As such, the risk balance surrounding Japan's core CPI is clearly skewed to the downside," Ueno said.

Comments and Ideas:

Yes, of course, to make everyone feel a little better, Kuroda is going to come out and say, the BOJ would consider what it can to help the economy. What head of any central bank would not say that?

And we will see, more an more news is beginning to show the affects of the virus situation and how the Japanese economy is responding or not responding related to different sectors in the economy.

There is always this idea, related to the above ideas, as to how much should a central bank or even the fiscal side of the government intervene whenever there is a situation in which the economy is not doing as well as expected. Some would say let the economy be natural and let it try to fix itself, more or less, and or let the normal business cycle run its course, and the economy will adjust and fix its self over time. Some would say it is the government's responsibility, including the central bank, to help the economy along or fix areas where there is market failure and or major economic discrepancies that seem abnormal or seem not able to fix itself.

So is the idea of low inflation an abnormal situation in Japan. Perhaps now it has become the "new normal" meaning it is just part of the normal economic landscape and its not going to change even with 5+ years of the BOJ trying to stimulate inflation in Japan.

So this virus situation is not a normal situation and of course the government should step in, wherever possible to help maintain economic growth.

Article:

The so-called core-core price index, which excludes food and energy prices and is closely watched by the central bank as a narrower gauge of inflation, rose 0.8% in the year to January, it showed.

Stripping out the impact of a sales tax hike to 10% from 8% in October and some other policy steps, the core CPI index rose 0.4% in January from a year earlier and the core-core inflation index rose 0.6%, both unchanged from December, the data showed.

Friday's data comes after a batch of gloomy indicators this week highlighted a fragile economy. Exports fell again in January, a key gauge of capital spending tumbled the most since 2018, and gross domestic product (GDP) suffered its deepest contraction since the second quarter of 2014.

The Japanese economy shrank an annualised 6.3% in October-December, the biggest drop in nearly six years, as domestic demand took a hit from the tax hike, typhoons and a warm winter.

Comments and Ideas:

Related to the CPI and core-inflation, it appears that any kind of moderate increase, with all that is happening now, is not really a bad thing. But in reality, the two indicators really have never shown exceptional growth, and again maybe the "new normal" in being most indicators, taking out the virus situation, are going to be only in the low to moderate growth range.

But to be fair, recently, Japan seems to always label itself as a fragile economy, meaning since the 1989/1990 asset bubble situation, the economy, while a very stable economy, has not grown at the pace anyone has wanted or maybe what Japan needs. But it growing, however slow or weak, it is still there.

Article:

Some economists expect a contraction in growth this quarter, which will mean a technical recession, as the virus outbreak hits China's economy - Japan's largest trading partner and the core of global supply chains.

Highlighting the uncertain outlook, Japan's factory activity suffered its steepest contraction in seven years in February, offering the clearest evidence yet of the coronavirus epidemic's damaging effects on global growth and businesses.

Comments and Ideas:

Yes, no doubt Japan could be headed toward some kind of recession. But a recession, in and of itself is not the end of the world, as usually it is a normal adjustment in an economy, meaning the economy is just re-setting itself, and it will come out of it in the future, whether that is one quarter or two quarters. But of course this is not normal times as the virus situation has abnormally disrupted many areas of all economies and especially Japan.

© 2020, Tom Metts, all rights reserved