"The monthly report from Tokyo's Ministry of Finance is blunt in its assessment. "Recent price developments show that the Japanese economy is in a mild deflationary phase," it says starkly, before calling on the Bank of Japan to implement "appropriate and flexible monetary policy" to help fix the problem. ....In Japan, it is already happening. As Tokyo admitted yesterday, deflation has haunted the country since the spring and is now worsening faster even than in the years after the bursting of the 1989 asset bubble. Core CPI – which excludes fresh food – was running at minus 0.1 per cent in March. By June it was minus 1.7 per cent. Now it is between minus 2.2 and minus 2.4 per cent. But CPI is not all there is, and real deflation is typically taken to include falls in the nominal value of all kinds of assets, not just consumer prices."