Japan CPI Fell 0.2% - 27.7.2012

The National Statistics Bureau reported early today that consumer prices in Japan dropped unexpectedly in June by 0.2% annually, following a 0.2% increase in May. The measure which excludes fresh food also fell by 0.2% after a 0.1% decrease in the previous month. Another disappointing report came from retail sales industry, this indicator of consumption activity gained in June 0.2% annually, following a 3.6% increase in May. Weaker than expected data suggest the economy is loosing momentum. Domestic consumptions is falling, while strong yen and austerity measures are limiting demand for Japanese goods from abroad – exports fell in May by 10.3% and in June – by 6%. The yen has been strengthening against the dollar since the middle of March 2012. Today the pair traded in a narrow range 78.17-78.37.