IN BRIEF : Japan Holds ’88 Inflation to 0.7%

Japan announced today that inflation for the year came to 0.7%, a figure greeted with relief by economists who had worried that brisk economic growth and a new sales tax might push up prices.

They said the figure, the third straight year of inflation of less than 1%, points to low inflationary pressures for 1989 as well, with lower costs of imports dampening domestic prices and keeping a lid on inflation.

Prices fell 0.3% in December from the previous month and rose 1% from a year earlier, the government’s Management and Coordination Agency said.

The month-on-month decline in December was caused mainly by a sharp fall in prices of fresh vegetables and seaweeds, the government said.

Many economists expect Japan’s consumer price increases to hold below 2% this year, a level that presents no threat to the economy.

“If consumer prices were climbing 3% or 4%, we would have problems. But with prices going up between only 1% to 2% this year, there is no need for worry,” said chief economist Toshiaki Kakimoto at Sumitomo Bank.

Kakimoto sees consumer prices gaining 1.6% in 1989. Forecasts by other economists range between 1.4% and 1.9%.