The retail sales in Japan rose dramatically in February as a result of the government stimulus measures. With their stimulus measures the government has encouraged the consumers to spend more.
Sales rose by 4.2% compared with the year earlier, much more than analysts had expected. They say that this rise in retail sales is too good to be true.
Some of the government stimulus measures will continue until April and others will go on until September. After these stimulus measures expire, there should be a big negative rebound in retail sales.
The consumer prices fell by 1.2% in February from a year earlier, it is the 12th month in a row that the consumer prices have fallen. The Japan’s central bank increased the amount of money that they set available to banks for short-term loans. With this they try to halt the fall in prices
Despite of the government and central bank measures, analysts believe that Japan could be set for a long period of price falls.
The fall of prices is not a good thing for the economy in Japan. I think they should find other measures to slow down or to stop the price falls. The deflation is a sign that the Japan’s economy is starting to show some unhealthy signals. Japan has a history of struggling with deflation, so measures and solutions to stimuli the economy are needed.
Thibaut Delsoir
Source: http://news.bbc.co.uk/2/hi/business/8592222.stm
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