Japan has fallen back into deflation for the first time in two and a half years.<br /><br /> It’s being seen as a setback to efforts to stimulate the economy.<br /><br /> It comes despite encouraging signs of inflation at home. Core prices excluding food and energy were up by 0.8 percent on a year ago.<br /><br /> But headline prices not including fresh food were down by 0.1 percent in August compared to a year earlier – as the domestic picture was offset by slumping global energy prices.<br /><br /> Lower prices are seen as bad for the wider economy, discouraging spending and investment and pulling down wages.<br /><br /> The figures are a blow to the prime minister, coming just a day after Shinzo Abe pledged to refocus on his ‘Abenomics’ growth project.<br /><br /> Now the Bank of Japan is under increasing pressure to ease monetary policy further, unleashing more stimulus to counter the downturn.
