Looking at developments in prices in Japan, the pace of the year-on-year decline in the CPI (excluding fresh food) – which posted the largest fall on record, minus 2.4 percent, in August 2009 – has started to decelerate with the effects of the drop in the prices of petroleum products following their surge in 2008 waning.
The moderating trend in the pace of decline in the CPI has continued against the background of the gradual improvement in the aggregate demand and supply balance. Recently, the rate of change in the CPI has been hovering around minus 1 percent once the effects of subsidies for high school tuition fees are taken out.