Deflation is back

Signs of deflation have been mounting in recent months. The latest data suggest that deflation is back -- at least in Asia.

Japan's consumer price index (CPI) fell 0.5 percent in December from the previous month, according to the Ministry of Internal Affairs and Communications. Core CPI, though, was up 0.1 percent. Year-on-year, overall CPI rose 0.2 percent but core CPI fell 0.2 percent.

However, in a more current indication of inflation, the metropolitan Tokyo core CPI fell 0.9 percent in January from the previous month, the ministry reported. Year-on-year, the Tokyo area core CPI fell 0.5 percent, the 63rd straight monthly decline.

In other news from Japan, industrial production fell 1.2 percent in December, while spending by salaried workers' households was down 3.8 percent from a year earlier in December as well as from a month earlier.

While Japan's unemployment rate did fall in December, some economists point out that that could be partly because of a shrinking labor force in Japan.

Further signs of deflation came from Singapore. Yesterday, the Department of Statistics, Singapore reported that the consumer price index for the city-state fell 0.1 percent in December over the previous month. This was due mainly to lower costs of transport and communication as well as cheaper clothing.

Next in line for deflation could be Hong Kong and -- if the renminbi peg is changed or removed -- China.

There are no signs of deflation in the US, though. The latest figures for durable goods orders in the US show a 0.6 percent rise in December. Excluding transportation, orders rose 2.1 percent. Orders were especially strong for computers and electronic products, which rose 6.4 percent.