The Topix stock index also fell 3.5 percent today, following an unexpected drop in U.S. retail sales announced yesterday. The yen also keeps on pushing upwards at the moment, rising to 106.05 per dollar at the close in Tokyo this afternoon, after touching 105.97, the strongest since May 2005 earlier in the day.
In seperate news it was announced that Japanese producer prices rose 2.6 percent in December from December 2006, the fastest pace since September 2006. Higher oil and raw-materials costs are thus squeezing profit margins at just the time when both internal and external demand are slackening off.
A Bank of Japan survey out today also showed that consumers last quarter became the most pessimistic they have been about the economy since March 2003. And 86 percent of respondents predicted prices will rise this year, the highest proportion since the central bank started asking people about inflation expectations in 1997. Some 54.5 percent of the survey's respondents said they plan to cut back on spending this year. About 40 percent said they expect wages to fall this year, compared with 38.9 percent in the previous survey. Meantime Bank of Japan Governor Toshihiko Fukui said yesterday that Japan's growth will keep slowing "for the time being" reinforcing speculation policy makers may lower interest rates at some point in the not too distant future.
