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Economics Gazette

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November 17, 2019

Japanese inflation remains far from the target of the central bank

Japan inflationThe Japanese inflation is still far from the target of the central bank and the government, despite the extremely loose monetary policy. In January, the consumer prices, excluding fresh food costs, rose to 0.9% yoy as well as in the previous two months. This means that this price index, to which monetary authorities pay particular attention, has risen slightly more than expected by the experts, but still remains well below the central bank’s target of an increase of two percent. This is the 13th consecutive month of rising against the backdrop of rising energy prices.

The oil prices grew by 8.8% and electricity by 6.4%. The index of price movements of basic consumer goods, excluding fresh food, has risen to 100.4 points compared to 100 points on 2015, the Ministry of Economy has stated.

The Japanese central bank has been struggling for years with the risk of price depression or stagnation. This always puts consumers at risk of postponing the purchase of more expensive consumer goods in the hope of lower prices, thereby stifling economic development.

The world’s third economy fell into prolonged deflation and this made the Central bank of Japan in April 2013 to declare a cheap lending policy in order to achieve inflation of 2%.

The private consumption continues to be relatively weak. Although the country is currently in its longest growth phase since the late 1980s, exports and corporate investment companies are the driving force behind this.

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