Japan Consumer Prices:

 https://mainichi.jp/english/articles/20201218/p2g/00m/0bu/035000c

Ideas:

Core consumer prices can be related to many variables. Supply and demand of course are the two main variables that affect core prices.

Overall producer price increases or decreases might have some affect. Mostly producer price increases in that producers might "pass on"the increases to the end buyer. But also supply can be a factor. If there is a huge surplus of a product producers might be forced to lower prices due to the fact that the supply is more than the market can handle and in order to more their products and gain some kind of revenue or profit they are forced to lower prices.

If there is a shortage of a product, producers might be forced to increase prices in order to maintain and certain level of profit similar to a normal period without surpluses or shortages.

In this case, because of the virus situation, there might be a large surplus of some products which forced producers to drastically reduce prices.

However, there is always a however in economics, if because of a huge decrease in demand related to the virus situation, some producers might reduce prices as an incentive to get consumers or buy and some might actually increase prices because they need to keep a certain profit level to survive or stay in business. 

But again the Bank of Japan is still, good or bad, focused on the 2 percent inflation range. I think, during the virus situation the Bank of Japan might better focus less on the 2 percent target and focus on helping business and families survive the virus situation and then when things begin to get back to normal then begin again to focus on the 2 percent inflation level for the economy.

The idea that the BOJ has the CPI forecast at only 0.6 is not bad considering all the difficulties the business and society has gone through in the virus situation. It good have been much worse.

However, as we see, an economy is very complex. The accommodation industry has probably, along the overall tourism and the airline industry have probably suffered the most. 

As with any economy, even during a pandemic there will be some positives and of course mostly negatives. In a normal economy there are always positives and negatives, meaning a market economy always has some industries doing better than other industries and some businesses doing better than other businesses.

But this is not the time, as I've written in other posts, to just let the market decide the winners and losers. This is not a normal market economy right now.

The "Go To Travel" strategy might have been a good idea, at the time, but no one, in any country, expected this kind of third wave the global economy is now experiencing. The suspension of the program is probably the best strategy at this time.

What we see here is the interconnection of an economy and how so many sectors or areas are rely on each other to grow. 

Its interesting, maybe because of regulations, that the oil and or electric companies didn't maintain or keep their prices for the end users despite maybe their lower producer prices and it looks like the might have "passed on" their lower prices to end users. Maybe because of the pandemic situation and or an somewhat decrease in demand for some energy products.

And then there is always the idea, sometimes, producers will raise their prices even though demand might be down, in order to keep or try to keep the same level of profits.

Consumer spending mostly likely will not see a significant increase during this third wave as consumers might stay away from places where there are large crowds.

But at the same time, as there are positives and negatives, there again might be a significant increase in online shopping and food deliveries and so on during this third wave.

Have a nice day and be safe!