Japan Stocks Drop as Inflation Rises

Tokyo shares fell sharply on Friday on the back of a stronger yen. At the same time, a June report showed Japanese consumer prices rising at their highest annual pace since November 2008, a possible sign that the Bank of Japan (BOJ) is slowly winning its fight to end two decades of deflation and boost prices in the world's third largest economy.
Japan's core consumer price index, which excludes volatile food prices, rose 0.4 percent year-on-year, turning positive after a flat reading in May. The June showing was the first time in 14 months that consumer prices have risen. The figure came in just above the expectations of analysts polled by Reuters for a 0.3 percent increase.
The numbers come in response to an aggressive stimulus program put in place in April to meet a 2 percent inflation target over a two-year horizon. The program included pumping $1.4 trillion into the economy by the end of 2014. This initiative has helped weaken the yen, which in turn is helping to push up inflation. Japan's currency has weakened about 15 percent against the dollar so far this year.