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Japan’s consumer prices fell at a faster-than-expected pace in July and unemployment rose sharply, according to data released on Friday, as the country prepared to vote in a new government on Sunday to lead the economy’s recovery.

The jobless rate jumped to 5.7 per cent in July from 5.4 per cent in June – the highest level since records began in 1960 – as businesses continued to cut their workforce and new graduates joined the labour market.

Rising job insecurity continued to weigh on private spending. Japanese household spending fell 1.3 per cent compared with June on a seasonally adjusted basis while worsening deflation could further damp demand. Last month, core consumer prices, excluding fresh food, fell 2.2 per cent from a year ago, compared with a drop of 1.7 per cent in June. The decline was the worst since records began in the early 1970s.

So-called “core-core” consumer prices, excluding food and energy, dropped 0.9 per cent from a year ago.(…)

Japan, which emerged from recession in the second quarter, is expected to see another quarter of growth in the July-to-September period after the volume of exports rose a seasonally adjusted 2.3 per cent in July from June.(…)

Full FT article