Japan inflation and activity indicators are moving in the right direction

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August 31, 2013

TOKYO - In a positive sign that deflation is ending, Japanese CPI inflation picked up in line with expectations to 0.7% y/y in July, its highest rate since end-2008, although still well short of the official 2% target. In addition, after a dip in June, July activity indicators picked up, providing further evidence that expansionary monetary and fiscal policies are working in the right direction.