In a recent interview with the Financial Times, Japanese Finance Minister Katsunobu Kato mentioned that Japan had yet to combat deflation despite rising consumer prices and a surge in wages.
Current State of Deflation
Kato explained that seemingly positive trends in the consumer markets were not enough to declare Japan free of deflation. The government would only consider deflation over when there were no more prospects of reverting to the trend. Japan has been facing chronic deflation since the late 1990s.
BOJ Policies and Economic Measures
The Bank of Japan (BOJ) and the government have worked toward strategies to raise inflation, including the reintroduced rate hikes. BOJ Deputy Governor Uchida Shinichi explained that persistent deflation involved zero or negative changes in consumer prices due to factors like declining population and asset bubble burst.
Expert Opinions and Government Statements
Japanese Economy Minister Ryosei Akazawa believes deflation is ending, but Moody's Analytics economist Stefan Angrick insists inflation is unachievable without strong domestic demand. Meanwhile, the head of the largest trade union, Rengo, reported negotiations for wage increases.
The question of deflation ending in Japan remains open, despite certain progress in economic indicators. The government continues to work towards stabilizing the economy and achieving sustainable inflation levels.
