There are indications that Japan may announce an end to deflation due to the recent rise in prices. This potential announcement would mark a significant turning point for the world's fourth-largest economy, which has experienced decades of economic stagnation.
However, Japan's top government ministers have denied a media report suggesting that Tokyo is considering an end to deflation. They clarified that policymakers are instead focused on preventing a prolonged period of falling prices and are committed to ensuring the economy's stability.
Economy Minister Yoshitaka Shindo clarified that the government is not currently considering an end to deflation. Instead, the government aims to promote wage growth that surpasses inflation, preventing the economy from slipping back into a period of prolonged price declines.
To determine whether deflation has indeed ended, the Japanese government will closely examine various indicators such as consumer prices, unit labor costs, the output gap, and the GDP deflator. In 2001, the Japanese government acknowledged, for the first time, that the economy was in a state of deflation. Over the past two decades, Japan has grappled with the challenges of breaking the cycle of declining corporate profits, stagnant wages, and weak consumer spending.
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