TOKYO, Jan. 22 (Xinhua) -- Japan's core consumer prices fell 1.0 percent in December from a year earlier, the steepest drop in over 10 years amid the COVID-19 outbreak, mainly due to lower energy prices and the domestic travel subsidy program, the government said in a report on Friday.
According to the Ministry of Internal Affairs and Communications, nationwide core consumer prices posted the sharpest fall since September 2010 and declined for a fifth successive month.
The latest reading comes on the heels of core consumer prices, excluding volatile fresh food items, retreating 0.9 percent in November.
In 2020, the core consumer price index's median decline was 0.2 percent, marking the first fall in four years, and still well below the Bank of Japan's (BOJ) 2 percent inflation target.
According to an official of the Ministry of Internal Affairs and Communications, the yearly fall is largely attributed to lower crude oil prices amid the global COVID-19 pandemic and the government's free preschool education program launched in October 2019.
Speaking at a press conference on Thursday following the central bank's two-day policy meeting, Haruhiko Kuroda, BOJ governor, dismissed concerns that the country's economy could slip into deflation.
"Recent falls in the CPI are temporary as they have resulted from lower crude oil prices and the travel subsidy program," said Kuroda, adding that the risk of deflation is "not high."
The latest report showed that electricity and gas bills fell 7.9 percent and 9.5 percent respectively in December, mainly due to lower energy prices in the first half of 2020.
Meanwhile, gasoline prices dropped 8.9 percent due to declining crude oil prices in the reporting month, while prices for kerosene products slipped 14.4 percent.
The report also showed that due to the government's "Go To Travel" subsidy program aimed at boosting the tourism industry battered by the COVID-19 pandemic, accommodation fees slumped 33.5 percent from the previous year.
According to the ministry official, the program effectively reduced the CPI by 0.4 percentage point in the reporting month. Due to a resurgence of virus infections across the country, Prime Minister Yoshihide Suga suspended the program in late December.
"Weak consumption in the services sector put pressure on overall prices, as people refrained from traveling and having parties in the year-end and New Year holidays following a resurgence of virus infections," Takeshi Minami, chief economist at the Norinchukin Research Institute, was quoted by local media as saying.
"COVID-19 vaccinations could revive demand if proven to be effective, but it remains unclear whether consumption will recover to the pre-pandemic level," Minami added. Enditem
