Japan not out of deflation yet: economics minister
August 16, 2014, 12:02 am TWN
TOKYO--Japan hasn't emerged from years of deflation quite yet, the country's economy minister said Friday, after a sales tax hike sparked a sharp decline in second-quarter growth.
The comments from Akira Amari came two days after fresh data showed the economy suffered its biggest quarterly contraction since the 2011 quake and tsunami disasters as the levy rise slammed the brakes on growth.
Tokyo has been working to reverse years of falling prices that held back the world's number three-economy.
While the plan to usher in lasting inflation has been showing signs of working, Amari said there was still work to do before declaring victory.
"At this moment, it's too early to declare an end to deflation," Amari told reporters.
"There are several factors still to see, including the impact of the consumption tax (hike)."
While deflation may sound like a good thing, it encourages consumers to put off buying goods in the hopes of getting them cheaper down the road, hurting producers and the wider economy.