Pace of Japanese deflation steadies

Japanese goods fell on average by 2 per cent in 2002, as the country's three-year deflation run continues.

The fall was lower than a drop of 2.3 per cent in 2001, according to figures from the Bank of Japan. Economists said the pace of deflation was steady toward the end of 2002, although it might accelerate this year.

Peter Morgan, chief economist at HSBC in Tokyo, told the Financial Times that while growth in the second and third quarters of 2002 brought the rate of deflation down, it was fla