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by merijnknibbe
We should not read too much in one data-point. But we also should take it serious: there might well be some kind of deflation shock in Japan. Which adds some background to the aggressive reflation policies proposed by Shinzo Abe. A 4% deflation rate is a massive failure of central bank policies and preliminary data must have been buzzing around for quite some time, by now.
Source: Eurostat
We should not read too much in one data-point. But we also should take it serious: there might well be some kind of deflation shock in Japan. Which adds some background to the aggressive reflation policies proposed by Shinzo Abe. A 4% deflation rate is a massive failure of central bank policies and preliminary data must have been buzzing around for quite some time, by now.
Source: Eurostat
From Real World Economics Review: http://rwer.wordpress.com/2013/02/17...hock-in-japan/
Was this known before this talk about reflation and raising of the inflation target began, or is it a new development?
This may be a complete red herring, but it reminds me of something Mike Shedlock at one point said about China, about how the fact that there is so much speculative money bidding up the currency that once the price movement actually happens, the currency flow would reverse and send the trend in the complete opposite direction. With some imagination I can see a mirror image of that scenario in this data. But like I said, this is just a random thought about it.