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JAPAN fell back into deflation yesterday, dealing another blow to right-wing Prime Minister Shinzo Abe’s economic policies.
Mr Abe, who has faced mass demonstrations against his decision to tear up the country’s pacifist constitution, had announced a “second stage” of his “Abenomics” strategy just the day before.
The most recent figures showed that prices decreased by 0.1 per cent — a small drop but a bad sign, particularly given the country’s long struggle with deflation from the early 1990s.
Deflation is a worry because it puts extra pressure on those who owe money — whether personal debt, mortgages or loans for business investment.
The results of Mr Abe’s plans so far have been mixed. While increased public spending has the potential to benefit the public, quantitative easing and tax cuts for businesses and the rich have had the usual effect — massive increases in wealth at the top and low wage rises for everyone else.
