Japan’s govmt says the country may be at an inflection point in its battle with deflation

The Japanese government’s annual economic white paper says “Japan has seen price and wage rises broaden since the spring of 2022. Such changes suggest the economy is reaching a turning point in its 25-year battle with deflation”.

  • “We shouldn’t dismiss the fact a window of opportunity may be opening to exit deflation,” as inflation perks up and public perceptions about persistent price declines abate, it said.

Leading up to this the Bank of Japan has said that both corporate price- and wage-setting behaviour was changing, and that this could could pave the way for phasing out the country’s massive fiscal and monetary support. Not yet of course, but such an acknowledgement is significant.

Reuters have more on this, which provides a good summary of whats going right, and what isn’t, for Japan’s efforts to climb out of deflation.

USD/JPY is not reflecting the ‘exit from deflation’ view just yet:

This article was written by Eamonn Sheridan at www.forexlive.com. Source