— Adds Details At Bottom
— Japan Core CPI Posts 13th Straight Y/Y Drop
— Central Tokyo Apr Core CPI -1.9% Y/Y Vs Mar -1.8%
— Electronics Continue To Lead Japan CPI Declines
— Japan Overall Energy Costs Post Small Y/Y Rise In Mar
— Japan FY09 Average Core CPI -1.6% Y/Y Vs FY08 +1.2%
— Japan FY09 Average Core CPI Drop 1st In 5 Years

TOKYO (MNI) – Japan’s core consumer inflation rate fell 1.2% in
March, the 13th straight year-on-year drop, the same rate of decline as
in February, official data released on Friday showed.

Continued sharp discounts on durable goods — heaters/air
conditioners, flat-screen TVs and personal computers — led the price
drop, overwhelming a year-over-year rise in gasoline and heating oil
costs.

Utility chargers still showed a year-on-year drop but overall
energy costs posted a small 0.1% rise in March after falling 0.3% in
February.

The pace of the year-on-year rise the prices of refined petroleum
products accelerated in March to +12.0% from +11.5% in February. The y/y
rise in gasoline prices slowed to +16.4% in March from +17.8% in
February while the increase in heating oil was faster at +14.6% in
March, up from +8.2% in the previous month.

The decline in utility charges decelerated in March, with
electricity down 9.0% y/y vs. -9.4% in February and city gas falling
10.3% vs. -11.2% in the previous month.

For the whole of fiscal 2009 that ended on March 31, the average
national CPI fell 1.6% after rising 1.2% in fiscal 2008. The FY09 drop
was the first in five years, since -0.2% in fiscal 2004.

The rate of deflation in March was below the record -2.4% rate in
August last year. However, after declining for four months in a row to
-1.3% in December last year, the pace of price drops has changed little
in the last three months, causing some concern that deflation may more
deep rooted in Japan than previously thought.

On a month-over-month basis, the core national CPI rose 0.3% in
March after being unchanged in February, posting the first m/m rise in
six months.

The increase was led by higher prices of women’s spring clothing as
well as overseas tours and air fares.

Even though energy costs have recovered from year-earlier levels,
core CPI, which excludes fresh food but includes gasoline and heating
oil costs, has shown wide-spread declines in prices of goods and
services as retailers cut prices to lure customers.

Retail gasoline prices have been fluctuating in tight ranges in
recent weeks while their longer-term uptrend since mid-January 2009
remains intact.

Meanwhile, core central Tokyo CPI fell 1.9% year-on-year in April
after falling 1.8% in March, posting the 12th straight y/y drop.

The pace of decline accelerated for the first time in three months
but it was still slower than the -2.0% in January and the record drop of
2.2% hit in October 2009.

As expected, sharp drops in high school tuition led the decrease as
the government began to provide subsidies in the new fiscal year in
order to ease the financial burden on many households. It is expected to
have a similar impact on national CPI when its April figures are
released next month.

In Tokyo, gasoline and heating oil prices continued to rise from
year-earlier levels but the overall energy cost drop increased to -7.9%
y/y in April vs. -7.6% in March.

Month-on-month, core central Tokyo CPI fell 0.1% in April after
rising 0.3% in March, showing the first m/m drop in three months.

Sharp drops in high school educational costs more than offset
higher prices of women’s clothing and fees for playing golf.

CPI figures date to 1970 under the current 2005 base year.

Other details from the latest data:

National CPI excluding food and energy, or the U.S. style core CPI
(y/y): Mar -1.1% vs. Feb -1.1%, the 15th straight on-year drop.

Tokyo CPI excluding food and energy (y/y): Apr -1.4% vs. Mar -1.2%,
in negative territory for the 16th straight month.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4833 **

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