Wednesday June 10, 02:34 AM
Japan wholesale prices drop most in 22 years
TOKYO (AFP) - Japanese wholesale prices dived 5.4 percent in May from a year earlier to log the biggest drop in more than 22 years, official data showed amid fears over deflation in Asia's biggest economy.
It was the steepest fall since March 1987 when wholesale prices also tumbled 5.4 percent, the Bank of Japan said in a preliminary report, with the yen's appreciation reducing oil prices.
The reading was worse than a market forecast of a 5.1 percent fall and represented the fifth straight month of declines year-on-year. The fall was steeper than a revised 4.0 percent drop in April.
Annual wholesale inflation surged to more than seven percent last August on the back of higher oil and material costs, but has since evaporated.
Compared with the previous month, wholesale prices in May fell by 0.4 percent, the ninth straight month of declines, the central bank said.
Core (Berlin: LJ1.BE - news) machinery orders, a leading indicator of corporate capital spending, fell 5.4 percent in April from the previous month, official data showed.
The reading was worse than the average market forecast of a 0.8 percent increase. Orders in March fell 1.3 percent month-on-month.
Core private-sector orders, which exclude particularly volatile demand from power companies and for ships, are seen as a barometer of business investment.
The government said last month it expected core machinery orders would decline 5.0 percent in the three months to June.
Orders dropped 9.9 percent in the three months to March compared with the previous quarter.
The Japanese economy is seen as being on course for its worst recession since World War II as the global economic crisis hits exports.
Japan, the world's second-largest economy, was stuck in a deflationary spiral for years after its asset price bubble burst in the early 1990s, prompting the central bank to slash interest rates to almost zero.
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