Japanese Industrial production dropped Deflation back to haunt Japan

Japan continues to struggle to recover from the deadly earthquake and Tsunami in March which had disrupted its supply chain network and industrial production in the affected region completely. Japan-s industrial production dropped 2.6% in November compared to same month last year due to strong yen, lower global demand and flood in Thailand. Industrial output rose 2.2% in the previous month of October.

At the same time, Consumer prices dropped by 0.2% in the same month compared to 0.1% drop in the previous month. Continuous decline in the consumer prices increases another round of deflation for Japan which had affected the economy severely a decade ago. Bank of Japan continues to pump in more liquidity in the financial market to boost growth and stop any kind of deflation. In spite of this effort, Japan expects its GDP to contract by 0.1% for the current year.