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TOKYO (Reuters) – Japanese wholesale prices fell 0.8% in September from the same month a year earlier, data showed on Monday, marking the seventh straight month of year-on-year declines and heightening the risk the country will slide back into deflation.

Squeezed mostly by soft global demand for commodities and Japanese machinery goods, the weakness in wholesale prices highlights the challenge Tokyo faces in cushioning the impact of the coronavirus pandemic on the world’s third-largest economy.

The 0.8% fall in the corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, was bigger than a median market forecast for a 0.5% drop. It followed August’s 0.6% year-on-year decrease.

Wholesale prices also slid 0.2% in September from August, marking the first on-month drop in four months, the data released by the Bank of Japan (BOJ) showed.

“With the global economy still reeling from the

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On Aug. 27, the Fed announced a new inflation targeting regime:

On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it “seeks to achieve inflation that averages 2 percent over time.” To this end, the revised statement states that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”

There are several reasons for the change. The first is that the market interpreted the previous “symmetrical” program as imposing an inflation ceiling. Vice President Clarida explains (emphasis added):

For example, under our previous flexible inflation-targeting framework, the Federal Reserve declared that the 2 percent inflation objective is “symmetric.” This term has been interpreted by many observers to mean that the Committee’s reaction function aimed to be symmetric on either side

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