Japan's Sept consumer prices continue to slide on deflationary pressure from COVID-19

BY Reuters | ECONOMIC | 10/22/20 07:44 PM EDT

* Sept nationwide core CPI falls 0.3% yr/yr vs f'cast -0.4%

* Core-core CPI flat in Sept from year-before level

* Slide in energy costs, govt travel subsidies weigh on CPI

* BOJ seen trimming growth, price f'casts next week - sources

By Leika Kihara

TOKYO, Oct 23 (Reuters) - Japan's core consumer prices fell 0.3% in September from a year earlier, marking the second straight month of declines in a sign the coronavirus-induced demand downturn is piling deflationary pressure on the world's third largest economy.

The data is expected to heighten expectations the Bank of Japan will maintain its massive stimulus programme to cushion the economic blow from the pandemic, analysts say.

The drop in the nationwide core consumer price index (CPI), which excludes volatile fresh food but includes enegy costs, compared with a median market forecast for a 0.4% fall.

Most of the drop was due to falling energy costs and the impact of a government-funded discount programme for domestic travel, which aims to support Japan's ailing tourism sector.

The so-called core core CPI, which strips away both energy and fresh food prices, was flat in September from a year earlier, government data showed on Friday.

Japan's economy suffered its biggest postwar slump in the second quarter, and analysts expect any rebound to be modest due to soft consumption and capital spending.

Sources have told Reuters the BOJ is expected to slash its economic and price forecasts for the current fiscal year in its upcoming quarterly projections due next week. (Reporting by Leika Kihara; editing by Jane Wardell)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.